Worksheet_Three - income to support themselves without...

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Tax Research Worksheet #3 Fall 2010 Due: September 22, 2010 S c h m i t t 1 5 p o i n t s Sarah is a single parent who is enrolled in a state-sponsored program that pays the childcare costs for her young son so she can be employed outside of the home. Under the program, Sarah gets to pick her childcare provider and payments are made by the state directly to that provider. Sarah chose her parents, Kim and Jim, as the childcare providers. Thus, Sarah’s parents were paid $12,000 for the year to care for their grandchild. Kim and Jim are retirees who have sufficient
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Unformatted text preview: income to support themselves without these childcare payments. Kim and Jim have come to you with the following questions: 1) Do they have to include these payments in their income? 2) If the answer to #1 is yes, do they also have to pay self-employment tax on these payments? Required: Research this issue and write a properly formatted file memo and a letter to the client reporting your findings....
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This note was uploaded on 08/25/2010 for the course TAX 6875 taught by Professor Schmitt during the Spring '10 term at University of Central Florida.

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