This article contains a narrative summary of the dual-income couple used a sample household throughout the Holistiplan Academy series of articles related to their sample tax return linked below.
Sample Tax Return
Peter and Paula Professor and their two children, Bart and Lisa, live in Texas.
Peter (DOB = 3/15/1970) is a professor at the local university, with a gross salary of $140,000 and taxable wages (after retirement plan and other pre-tax deferrals) of $124,000. Paula (DOB: 10/1/1972) is self-employed as a professional food blogger, with gross receipts of $65,000 in 2022 and net profit of $52,900, as reported on her Schedule C.
Bart is an adorable rapscallion born in 2009, making him eligible for both the Child Tax Credit (CTC) and the dependent care expense credit.
Lisa is a rebellious teenager not yet off to college, born in 2005. While she is not eligible for the child tax credit, Peter and Paula can claim the Other Dependent Credit (ODC) for her.
Peter previously worked at a different university, and when he left that position he rolled over his retirement plan balance to an Individual Retirement Account (IRA). He'd also made after-tax contributions to that IRA, and in 2023 performed a partial Roth conversion. Due to having a combination of pre- and post-tax contributions in his IRA, some of that conversion was subject to tax.
They have heard about other retirement accounts like SEP-IRAs and SIMPLE-IRAs, but have never done much outside of Paula talking about them with her fellow food bloggers.
Peter and Paula maintain several savings and brokerage accounts. They realized interest and dividend income from these accounts, along with realized capital gains from the sale of assets in one of the brokerage accounts. They owned some of the sold assets for less than one year and some for more than a year.
Peter and Paula did some work on their house in 2023, including installing solar panels, which qualified them for a residential clean energy credit.