A. Ray and Maria Gomez have been married for 3 years. Ray is a propane salesman for Palm Oil Corporation and Maria works as a city clerk for the City of McAllen. Ray’s birthdate is February 21, 1990 and Maria’s is December 30, 1992. Ray and Maria’s earnings are reported on the following Form W-2s: 

Ray and Maria have interest income as reported on the following 1099-INT: 

In addition, they own U.S. Savings bonds (Series EE). The bonds had a value of $10,000 on January 1, 2018, and their value is $10,700 on December 31, 2018. They have not made an election with respect to these bonds. Ray has an ex-wife named Judy Gomez. Pursuant to their divorce decree, Ray pays her $450 per month in alimony. All payments were made on time in 2018. Judy’s Social Security number is 566-74-8765. During 2018, Ray was in the hospital for a successful operation. His health insurance company reimbursed Ray $4,732 for all of his hospital and doctor bills. In June of 2018, Maria’s father died. Under a life insurance policy owned and paid for by her father, Maria was paid death benefits of $25,000. Maria bought a Texas lottery ticket on impulse during 2018. Her ticket was lucky and she won $4,000. The winning amount was paid to Maria in November 2018, with no income tax withheld. Palm Oil Corporation provides Ray with a company car to drive while he is working. The Corporation spent $5,000 to maintain this vehicle during 2018. Ray never uses the car for personal purposes. 

Required: 

Complete the Gomez’s federal tax return for 2018 on Form 1040 and Schedule 1. 

B. In addition, they own U.S. Savings bonds (Series EE). The bonds had a value of $10,000 on January 1, 2018, and their value is $10,700 on December 31, 2018. They have not made an election with respect to these bonds. Ray has an ex-wife named Judy Gomez. Pursuant to their divorce decree, Ray pays her $450 per month in alimony. All payments were made on time in 2018. Judy’s Social Security number is 566-74-8765. During 2018, Ray was in the hospital for a successful operation. His health insurance company reimbursed Ray $4,732 for all of his hospital and doctor bills. In June of 2018, Maria’s father died. Under a life insurance policy owned and paid for by her father, Maria was paid death benefits of $25,000. Maria bought a Texas lottery ticket on impulse during 2018. Her ticket was lucky and she won $4,000. The winning amount was paid to Maria in November 2018, with no income tax withheld. Palm Oil Corporation provides Ray with a company car to drive while he is working. The Corporation spent $5,000 to maintain this vehicle during 2018. Ray never uses the car for personal purposes. Required: Complete the Gomez’s federal tax return for 2018 on Form 1040 and Schedule 1. 

Carl and Mary received the following Forms 1099: 

Mary is divorced and she pays her ex-husband (Tom Tortuga) child support. Pursuant to their 2015 divorce decree, Mary pays Tom $500 per month in child support. All payments were made on time in 2018. In June 2018, Mary’s father gave her a cash gift of $75,000. Mary also received unemployment compensation as shown on the following Form 1099-G: 

Mary won a $750 prize in a women’s club raffle in 2018. No income tax was withheld from the prize. The Key Lime Pie Company provides Carl with a company car to drive while he is working. The Company spent $6,475 to maintain this vehicle during 2018. Carl never uses the car for personal purposes. The Key Lime Pie Company also provides a cafeteria for all employees on the factory premises. Other restaurants exist in the area and so Carl is not required to eat in the cafeteria, but he typically does. The value of Carl’s meals is $650 in 2018. 

Required: 

Complete Carl and Mary’s federal tax return for 2018 on Form 1040 and Schedule 1.

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Safe, accurate, FAST! Use a Employee's social security number 469-21-5523 Visit the IRS website at e file IRS www.irs.gov/efie OMB No. 1545-0008 b Employer identification number (EIN) 21-7654321 c Employer's name, address, and ZIP code Wages, tips, other compensation 30,300.00 3 Social security wages 2 Federal income tax withheld 3,170.00 4 Social security tax withheld 1,878.60 6 Medicare tax withheld 439.35 Palm Oil Corporation 30,300.00 5 Medicare wages and tips 11134 E. Pecan Blvd. 30,300.00 7 Social security tips McAllen, TX 78501 8 Allocated tips d Control number 9 Verification code 10 Dependent care benefits Suff. 11 Nonqualified plans 12a See instructions for box 12 e Employee's first name and initial Last name Ray Gomez 1610 Quince Avenue 13 Statutory employee Thrd-party sick pay 12b Ratirement plan 14 Other 12c McAllen, TX 78701 12d t Employee's address and ZIP code Employer's state ID number 15 State 16 State wages, tips, etc. 17 State income tax 18 Local wages, tips, etc. 19 Local income tax 20 Locality name TX | W-2 Wage and Tax 2018 Department of the Treasury-Internal Revenue Service Statement Form Copy B-To Be Filed With Employee's FEDERAL Tax Return. This information is being fumished to the Internal Revenue Service. a Employee's social security number 444-65-9912 Safe, accurate, FAST! Use Visit the IRS website at GRS Rse file www.irs.govlefile OMB No. 1545-0008 b Employer identification number (EIN) 23-4444321 c Employer's name, address, and ZIP code 1 Wages, tips, other compensation 32,300.00 3 Social security wages 32,300.00 2 Federal income tax withheld 2,800.00 4 Social security tax withheld 2,002.60 City of McAllen 1300 W. Houston Ave. 5 Medicare wages and tips 32,300.00 7 Social security tips 6 Medicare tax withheld 468.35 McAllen, TX 78501 8 Allocated tips d Control number 9 Verification code 10 Dependent care benefits e Employee's first name and initial Last name Suff. 11 Nonqualified plans 12a See instructions for box 12 Maria Gomez 13 ttory employee Ratirement plan Thrd-party sick pay 12b 1610 Quince Ave. 14 Other 12c McAllen, TX 78701 12d 1 Employee's address and ZIP code 15 State Employer's state ID number 16 State wages, tips, etc. 17 State income tax 18 Local wages, tips, etc. 19 Local income tax 20 Locality name TX | Wage and Tax Statement 2018 Department of the Treasury-Internal Revenue Service W-2 Form Copy B-To Be Filed With Employee's FEDERAL Tax Return. This information is being fumished to the Internal Revenue Service.