Advanced Scenario 7: Matthew and Rebecca Monroe Interview Notes • Matthew is a 6th grade teacher at a public school. Matthew and Rebecca are married and choose to file Married Filing Jointly on their 2023 tax return. • Matthew worked a total of 1,500 hours in 2023. During the school year, he spent $733 on unreimbursed classroom expenses. • Rebecca retired in 2020 and began receiving her pension on November 1st of that year. She explains that this is a joint and survivor annuity. She has already recovered $1,259 of the cost of the plan. • Matthew settled with his credit card company on an outstanding bill and brought the Form 1099-C to the site. They aren’t sure how it will impact their tax return for tax year 2023. The Monroes determined that they were solvent as of the date of the canceled debt. • Rebecca received $200 from Jury duty. • Their daughter, Safari, is in her second year of college pursuing a bachelor’s degree in Biochemistry at a qualified educational institution. She received a scholarship and the terms require that it be used to pay tuition. Box 2 was not filled in and Box 7 was not checked on her Form 1098-T for the previous tax year. The Monroes provided Form 1098-T and an account statement from the college that included additional expenses. The Monroes paid $865 for books and equipment required for Safari's courses. This information is also included on the college statement of account. The Monroes claimed the American Opportunity Credit last year for the first time. • Safari does not have a felony drug conviction. Matthew wages $35,353.00 Rebecca 1099-R Pensions $20,000.00, federal income tax withheld was $2,000.00, employee contributions was $15,000 Rebecca SSA- 1099 was $22,899, federal income tax withheld was $2,290 Matthew cancellation of debit was $850.00 SAFARI 1098-T for college Payments received for tuition $5,522.00, Scholarships or grants $3,102, books $865.00 15. What is the taxable portion of Rebecca's pension from Riverside Enterprises using the simplified method? a. $0 b. $18,741 c. $19,419 d. $20,000 16. All of Rebecca’s social security benefits are taxable according to the social security benefits worksheet. a. True b. False 17. What is the total amount of other income reported on the Monroe's Form 1040, Schedule 1? a. $200 b. $850 c. $1,050 d. $4,152 18. Matthew is eligible to deduct qualified educator expenses in the amount of $____________ (Note: whole number only, do not use special characters.) 19. What is the Monroe's standard deduction on their 2023 tax return? a. $20,800 b. $27,700 c. $29,200 d. $30,700 20. Which of the following expenses qualify for the American opportunity credit? a. Required course related books and equipment b. Tuition c. Parking pass d. Both a and b 21. The Monroes are eligible to claim the credit for other dependents on their tax return. a. True b. False 22. What is the Monroe’s total federal income tax withholding? a. $5,200 b. $5,490 c. $6,200 d. $7,490

15. To calculate the taxable portion of Rebecca's pension using the simplified method, you divide the total employee contributions by the number of expected monthly payments. Since Rebecca has already recovered $1,259 of the cost of the plan, you subtract this from the employee contributions ($15,000 - $1,259 = $13,741). Assuming Rebecca is under the age of 65 and not disabled, the expected number of payments would be 360 (based on IRS Publication 939). For 2023, the amount recovered tax-free would be $13,741 / 360 = $38.17 per month. Since she receives her pension for 12 months, the tax-free amount for the year would be $38.17 * 12 = $458.04. The taxable portion of the pension is therefore $20,000 - $458.04 = $19,541.96, which rounds to the nearest dollar as $19,542. However, this option is not listed, so the closest answer would be: c. $19,419 16. Not all of Rebecca's social security benefits are necessarily taxable. The taxation of social security benefits depends on the combined income (adjusted gross income + nontaxable interest + half of social security benefits). Without additional information on their combined income, we cannot determine the taxable amount of the social security benefits. Therefore, the statement is: b. False 17. The total amount of other income reported on the Monroe

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