Schedule C Scenario 5: Mary Jones

8/3/2019 Schedule C Scenario 5: Mary Jones

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VITA Schedule C Project Test

14

Schedule C Test Set 5: Mary Jones

Taxpayer Documents

• Social security cards for Mary and Susan Jones

• Completed intake and interview sheet

• Form 1099-MISC

Interview Notes

• Since 2006, Mary has been licensed to provide child daycare in her home in Illinois

for the state Department of Human Services. Mary is a cash basis taxpayer and

materially participates in the business.

• Mary cared for three pre-school children eight hours a day, five days a week, for 50

weeks in 2014. On every day the daycare was open, she spent one additional hour

on cleaning and recordkeeping related to the daycare business.

• Mary received a Form 1099-MISC from the state Department of Human Services.She was also paid $1,300 in cash directly from parents for daycare.

• Mary rents a furnished apartment and paid $950 per month rent, which includes

utilities except electricity. The total area of the apartment is 1,200 square feet and

she used 960 square feet of the apartment on a regular basis for daycare.

• Mary’s utility expense for electricity was $1,068 for all of 2014.

• Mary paid $75 per month for renter’s insurance.

• Mary kept records of the meals and snacks served to the children, but she does not

have all of her grocery receipts. She did not receive a government food subsidy.

Based on her calendar and notes, she served the following meals:

– 725 breakfasts

– 996 lunches and dinners combined

– 1,4 5 0 snacks

• Mary has receipts for the following items that she purchased for her business:

– $248 for games and art supplies

– $110 for cleaning supplies

– $267 for paper products

• Mary spent $240 on business use of her cell phone.

• Mary is not claiming dereciation on any items urchased in a revious tax year.



1 VITA Schedule C Project Test

• Mary drives once a week to the store for groceries and supplies for her business.

She owns one vehicle, which was placed in service on September 15, 2011. She

has a log which shows that she drove 674 business miles in 2014. Total mileage

on her car for the year was 8,000. She elects to use the standard mileage rate.

• Mary is not required to file any Form 1099s.



Form 1099-MISC

Miscellaneous

Income

Copy B

For Recipien

Department of the Treasury - Internal Revenue Service

This is important taxinformation and isbeing furnished to

the Internal RevenueService. If you are

required to file areturn, a negligence

penalty or othesanction may be

imposed on you ithis income is

taxable and the IRSdetermines that i

has not beenreported

OMB No. 1545-0115

PAYER’S name, street address, city or town, province or state, country, ZIPor foreign postal code, and telephone no.

PAYER’S federal identification number RECIPIENT’S identification number

RECIPIENT’S name

Street address (including apt. no.)

City or town, province or state, country, and ZIP or foreign postal code

Account number (see instructions)

1 Rents

$2 Royalties

$3 Other income

$

4 Federal income tax withheld

$5 Fishing boat proceeds

$

6 Medical and health care payments

$7 Nonemployee compensation

$

8 Substitute payments in lieu ofdividends or interest

$9 Payer made direct sales of

$5,000 or more of consumerproducts to a buyer(recipient) for resale

10 Crop insurance proceeds

$11 Foreign tax paid

$

12 Foreign country or U.S. possession

13 Excess golden parachute

payments

$

14 Gross proceeds paid to an

attorney

$15a Section 409A deferrals

$

15b Section 409A income

$

16 State tax withheld

$$

17 State/Payer’s state no. 18 State income

$$

Form 1099-MISC (keep for your records) www.irs.gov/form1099misc

2014STATE DEPT. OF HUMAN

SERVICES

418 SMITH STREET

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Schedule C Scenario 5: Mary Jones

Documents

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