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Lance H. and Wanda B. Dean are married and live at 431 Yucca Drive, Santa Fe,...

Lance H. and Wanda B. Dean are married and live at 431 Yucca Drive, Santa Fe, NM 87501. Lance works for the convention bureau of the local Chamber of Commerce, while Wanda is employed part-time as a paralegal for a law firm. During 2018, the Deans had the following receipts: Salaries ($60,000 for Lance, $41,000 for Wanda) $101,000 Interest income— City of Albuquerque general purpose bonds $1,000 Ford Motor company bonds 1,100 Ally Bank certificate of deposit 400 2,500 Child support payments from John Allen 7,200 Annual gifts from parents 26,000 Settlement from Roadrunner Touring Company 90,000 Lottery winnings 600 Federal income tax refund (for tax year 2017) 400 Wanda was previously married to John Allen. When they divorced several years ago, Wanda was awarded custody of their two children, Penny and Kyle. (Note: Wanda has never issued a Form 8332 waiver.) Under the divorce decree, John was obligated to pay alimony and child support—the alimony payments were to terminate if Wanda remarried. In July, while going to lunch in downtown Santa Fe, Wanda was injured by a tour bus. As the driver was clearly at fault, the owner of the bus, Roadrunner Touring Company, paid her medical expenses (including a one-week stay in a hospital). To avoid a lawsuit, Roadrunner also transferred $90,000 to her in settlement of the personal injuries she sustained. The Deans had the following expenditures for 2018: Medical expenses (not covered by insurance) $7,200 Taxes— Property taxes on personal residence $3,600 State of New Mexico income tax (includes amount withheld from wages during 2018) 4,200 7,800 Interest on home mortgage (First National Bank) 6,000 Charitable contributions 3,600 Life insurance premiums (policy on Lance's life) 1,200 Contribution to traditional IRA (on Wanda's behalf) 5,000 Traffic fines 300 Contribution to the reelection campaign fund of the mayor of Santa Fe 500 Funeral expenses for Wayne Boyle 6,300 The life insurance policy was taken out by Lance several years ago and designates Wanda as the beneficiary. As a part-time employee, Wanda is excluded from coverage under her employer's pension plan. Consequently, she provides for her own retirement with a traditional IRA obtained at a local trust company. Because the mayor is a member of the local Chamber of Commerce, Lance felt compelled to make the political contribution. The Deans' household includes the following, for whom they provide more than half of the support: Social Security Number Birth Date Lance Dean (age 42) 123-45-6786 12/16/1976 Wanda Dean (age 40) 123-45-6787 08/08/1978 Penny Allen (age 19) 123-45-6788 10/09/1999 Kyle Allen (age 16) 123-45-6789 05/03/2002 Wayne Boyle (age 75) 123-45-6785 06/15/1943 Penny graduated from high school on May 9, 2018, and is undecided about college. During 2018, she earned $8,500 (placed in a savings account) playing a harp in the lobby of a local hotel. Wayne is Wanda's widower father who died on January 20, 2018. For the past few years, Wayne qualified as a dependent of the Deans. Federal income tax withheld is $4,200 (Lance) and $2,100 (Wanda). The proper amount of Social Security and Medicare tax was withheld. Required: Determine the Federal income tax for 2018 for the Deans on a joint return by providing the following information that would appear on Form 1040 and Schedule A. They do not want to contribute to the Presidential Election Campaign Fund. All members of the family had health care coverage for all of 2018. If an overpayment results, it is to be refunded to them. Make realistic assumptions about any missing data. Enter all amounts as positive numbers. If an amount box does not require an entry or the answer is zero, enter "0". When computing the tax liability, do not round your immediate calculations. If required round your final answers to the nearest dollar.

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Answer #1

Given data

Salaries. = 101000

Interest(after tds) = 1550

Dividend(after tds) = 950

Gift from parents. = exempt

Compensation from road

Runner company. = 90000

Lottery( after 30% tds) = 420

It refund. =400

Total. =194320

Deduction:

Interest on home mortgage. =(6000)

Church pledge. =(3600)

Life insurance premium. =(1200)

Contribution to ira. =(5000)

Contribution to reelection fund=(500)

Net income. =178020

Note:

1) withheld tax should be deducted from tax payable determined.

2) penny income from her ability so it should not be clubbed with her parents income

2 38 Amount from line 37 (adjusted gross income) 39a CheckYou were bom before January 2, 1952, Blind. Total boxes Credtndbeo arumo Spouse was bom before January 2, 1952, ] Blind- checked 39a b 40 41 If your spouse itemizes on a separate return or you were a dual-status alien, check here 39b Itemized deductions (from Schedule A) or your standard deduction (see left margin) ·· Subtract line 40 from line 38 . . . . . . . | 40 People who 42 Exemptions. If ine 38 is $155,650 or less, muitiply $4,050 by the number on line 6d. Otherwise, see instructions 42 43 Taxable income. Subtract line 42 from line 41. If line 42 is more than line 41, enter-0 44 45 46 Excess advance premium tax credit repayment. Attach Form 8962 47 Add lines 44, 45, and 46. .. 48 Foreign tax credit. Attach Form 1116 if required.. . . 39aor 396 or claimed as a Tax (see instructions). Check if any from: a Form(s) 8814 b Alternative minimum tax (see instructions). Attach Form 6251 Form 4972 c . . . . . . . . . . .. . Married filing 49 Credit for child and dependent care expenses. Attach Form 2441 49 50 Education credits from Form 8863, line 19 Married filing 51 Retirement savings contributions credit. Attach Form 8880 51 52 53 Residential energy credits. Attach Form 5695 54 Other credits from Form: a 3800 b 8801 c 55 Add lines 48 through 54. These are your total credits 56 Subtract line 55 from line 47. If line 55 is more than line 47, enter-0- Child tax credit. Attach Schedule 8812, if required. .. Other 58 Unreported social security and Medicare tax from Form:a4137 8919 . . 58 59 Additional tax on IRAs, other qualified retirement plans, etc. Attach Form 5329 if required 60a Household employment taxes from Schedule H . . 60a b First-time homebuyer credit repayment. Attach Form 5405 if required .. 61 Health care: individual responsibility (see instructions) Full-year coverage 62 Taxes from: a□ Form 8959 b□ Form 8960 c □Instructions; enter code(s) 60b Payments 64 Federal income tax withheld from Forms W-2 and 1099 64 if you have a 66a Earned income credit (EIC) . . . . . Schedule EIC. 67 Additional child tax credit. Attach Schedule 8812 65 2016 estimated tax payments and amount applied from 2015 return 65 68 American opportunity credit from Form 8863, line 8 69 Net premium tax credit. Attach Form 8962 70 Amount paid with request for extension to file 71 Excess social security and tier 1 RRTA tax withheld .. 72 Credit for federal tax on fuels. Attach Form 4136 73 Credits from Form: a2439 bd8885 d 74 Add lines 64, 65, 66a, and 67 through 73. These are your total payments 75 76a Amount of line 75 you want refunded to you. If Form 8888 is attached, check here 8 Refund If line 74 is more than line 63, subtract line 63 from line 74. This is the amount you overpaid 5 76a 77 Amount of line 75 you want applied to your 2017 estimated tax77 78 Amount you owe. Subtract line 74 from line 63. For details on how to pay, see instructions 79 ▶ | 78 You Owe Estimated tax penalty (see instructions) Do you want to allow another person to discuss this return with the IRS see instructions ? □ Yes. Complete below. Under panalties of perjury, I declare that I have examined this return and accompanying schedulas and statements, and to the best of my knowladge and befef, they are true, comect, and accurately list al amounts and sources of income I received during the tax year. Declaration of preparer (other than taxpayer) is based on all information of which preparer has any knowledge Keep a copy for Spouses signature. If a joint retun, both must sign. Date Use Only Fims addross 0U.S. Individual Income Tax Return OMB No. 1545-0074 IRS Use Only-Do not write or staple in this space. For the yearJan. 1-Dec. 31,2016, or other tax year beginning Your first name and initial See separate instructions Your social security number 20 Last name Dean Last name If a joint retum, spouses first name and initial Spouses social security number Wanda B Dean address (number street). If you Make sure the SSN(s) above and on line 6c are correct. 431 Yucca Drive, Santa Fe. NM 87501 City, town or post office, state, and ZP code. If you have a foreign address, also complete spaces below (see instructions). Santa Fe Foreign country name New Mexico Presidential Election Campaign Check here fyou, or your spouse if fing onty want $3 to go tothis fund. Checking a box below will not change your tax or Foreign province/state/county Foreign postal code New Mexico 87501 Filing Status Single Check only one 3Married filing separately. Enter spouses SSN above Head of household (with qualifying person). (See instructions.) If the qualifying person is a child but not your depandent, onter this childs name here. 2 Married filing jointly (even if only one had income) and full name here. 5 Qualifying widowler) with dependent child 6a Yourself. If someone can claim you as a dependent, do not check box 6a. . . .. Boxes checked on 6a and 6b No. of children on 6c who: lived with you spouse (3) Dependents (4)child under age 1 relationship to ouqualitying for child tax credit social securityumberr 1 2 3 4 5 6 7 8 8 Children 1 2 3i4 56 7 89 Children 1 2 314 56 7 8 5 Father First name Last name did not live with you due to divorce or separation y Allen If more than four Kyle Allen on 6c check here d Total number of exemptions claimed ines Income 7 Wages, salaries, tips, etc. Attach Form(s) W-2 101000 . .. b Tax-exempt interest. Do not include on line 8a 9a Ordinary dividends. Attach Schedule B if required .8b Attach Form(s) W-2 here. Also attach Forms W-2G and 1099-R if tax was withheld. .. .. . . b Qualified dividends .. . . 9b 10 Taxable refunds, credits, or offsets of state and local income taxes . . 12 Business income or (loss). Attach Schedule C or C-EZ . . . 13 Capital gain or (loss). Attach Schedule D if required. If not required, check here13 14 Other gains or (losses). Attach Form 4797.... . .. 15a IRA distributions . 16a Pensions and annuities 16a 17 Rental real estate, royalties, partnerships, S corporations, trusts, etc. Attach Schedule E 17 18 Farm income or (loss). Attach Schedule F If you did not b Taxable amount b Taxable amount see -6000 9 arm 20a Social security benefits 20a 21 Other income. List type and amount 22 Combine the amounts in the far right column for lines 7 through 21. This is your total income22 b Taxable amount.. 99100 197000 21 23 Adjusted Gross Income 24 ain business expenses of reservists, performing artists, and fee-basis government officials. Attach Form 2106 or 2106-EZ 25 Health savings account deduction. Attach Form 8889 26 Moving expenses. Attach Form 3903 27 Deductible part of self-employment tax. Attach Schedule SE27 28 Self-employed SEP, SIMPLE, and qualifiled plans 29 Self-employed health insurance deduction 30 Penalty on earty withdrawal of savings...30 31a Alimony paid b Recipients SSN 32 IRA deduction 33 Student loan interest deduction.. 34 Tuition and fees. Attach Form 8917 35 Domestic production activities deduction. Attach Form 8903 35 36 Add lines 23 through 35 37 Subtract line 36 from line 22. This is your adjusted gross income 34 36 37 197000 For Disclosure, Privacy Act, and Paperwork Reduction Act Notice, see separate instructions. Cat. No. 113208 Fom 1040 (2016)2 38 Amount from line 37 (adjusted gross income) 39a CheckYou were bom before January 2, 1952, Blind. Total boxes Credtndbeo arumo Spouse was bom before January 2, 1952, ] Blind- checked 39a b 40 41 If your spouse itemizes on a separate return or you were a dual-status alien, check here 39b Itemized deductions (from Schedule A) or your standard deduction (see left margin) ·· Subtract line 40 from line 38 . . . . . . . | 40 People who 42 Exemptions. If ine 38 is $155,650 or less, muitiply $4,050 by the number on line 6d. Otherwise, see instructions 42 43 Taxable income. Subtract line 42 from line 41. If line 42 is more than line 41, enter-0 44 45 46 Excess advance premium tax credit repayment. Attach Form 8962 47 Add lines 44, 45, and 46. .. 48 Foreign tax credit. Attach Form 1116 if required.. . . 39aor 396 or claimed as a Tax (see instructions). Check if any from: a Form(s) 8814 b Alternative minimum tax (see instructions). Attach Form 6251 Form 4972 c . . . . . . . . . . .. . Married filing 49 Credit for child and dependent care expenses. Attach Form 2441 49 50 Education credits from Form 8863, line 19 Married filing 51 Retirement savings contributions credit. Attach Form 8880 51 52 53 Residential energy credits. Attach Form 5695 54 Other credits from Form: a 3800 b 8801 c 55 Add lines 48 through 54. These are your total credits 56 Subtract line 55 from line 47. If line 55 is more than line 47, enter-0- Child tax credit. Attach Schedule 8812, if required. .. Other 58 Unreported social security and Medicare tax from Form:a4137 8919 . . 58 59 Additional tax on IRAs, other qualified retirement plans, etc. Attach Form 5329 if required 60a Household employment taxes from Schedule H . . 60a b First-time homebuyer credit repayment. Attach Form 5405 if required .. 61 Health care: individual responsibility (see instructions) Full-year coverage 62 Taxes from: a□ Form 8959 b□ Form 8960 c □Instructions; enter code(s) 60b Payments 64 Federal income tax withheld from Forms W-2 and 1099 64 if you have a 66a Earned income credit (EIC) . . . . . Schedule EIC. 67 Additional child tax credit. Attach Schedule 8812 65 2016 estimated tax payments and amount applied from 2015 return 65 68 American opportunity credit from Form 8863, line 8 69 Net premium tax credit. Attach Form 8962 70 Amount paid with request for extension to file 71 Excess social security and tier 1 RRTA tax withheld .. 72 Credit for federal tax on fuels. Attach Form 4136 73 Credits from Form: a2439 bd8885 d 74 Add lines 64, 65, 66a, and 67 through 73. These are your total payments 75 76a Amount of line 75 you want refunded to you. If Form 8888 is attached, check here 8 Refund If line 74 is more than line 63, subtract line 63 from line 74. This is the amount you overpaid 5 76a 77 Amount of line 75 you want applied to your 2017 estimated tax77 78 Amount you owe. Subtract line 74 from line 63. For details on how to pay, see instructions 79 ▶ | 78 You Owe Estimated tax penalty (see instructions) Do you want to allow another person to discuss this return with the IRS see instructions ? □ Yes. Complete below. Under panalties of perjury, I declare that I have examined this return and accompanying schedulas and statements, and to the best of my knowladge and befef, they are true, comect, and accurately list al amounts and sources of income I received during the tax year. Declaration of preparer (other than taxpayer) is based on all information of which preparer has any knowledge Keep a copy for Spouses signature. If a joint retun, both must sign. Date Use Only Fims addross 0

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