CASE STUDY 2: Alan and Rebecca Raybower

Filing Status: Married filing jointly

Alan and Rebecca Raybower (ages 26 and 25 respectively) graduated from college together and got married soon after. They have no children, but they do own a home, which they bought last year because they each started putting money away for a down payment after taking CAFF 425 and learning about time value of money. Alans social security number is 777-55-1111. Rebeccas social security number is 444-66-2222. They currently reside at 246 Paso Ave., Seal Beach, CA, 90740.

Rebecca has one W-2 which shows earned income of $32,140 as a teacher. Federal income tax withheld from her salary was $2,448. She received $32 in taxable interest from her credit union and $320 in ordinary dividends from her stocks. Alan also has one W-2 which shows earned income of $45,670 as an accountant. Federal income tax withheld from his salary was $3,435. He received $45 in taxable interest from his credit union and $450 in ordinary dividends from his stocks. They are both covered under Alans health insurance plan and pay $350 monthly (which is included in the list of possible deductions below) for those benefits. They do not want to designate $3 for the presidential election campaign and received no virtual currency during the year.

Alan and Rebecca have listed as potential itemized deductions for this year the following:

Out of pocket medical expense $6,125

Charitable contribution to church $2,000

Used clothing donated to Goodwill $200

Interest paid on credit card bills $650

Home mortgage interest $14,586

Mortgage insurance premiums $3,486

Personal property taxes $230

Real estate (property) taxes $4,875

If Alan and Rebecca overpaid tax their taxes, they would like their refund deposited to their checking account. Routing # 235612903, account # 0004576918273. If Alan and Rebecca owe money, they will have no penalty. They do not want a Third Party Designee allowed.

Complete Form 1040 and Schedule A (itemized deductions). Be sure to compare the standard deduction to their itemized deductions and take the larger of the two. Sign as if you were Alan and Rebecca. Signature and date are required for the document to be accepted. You may not type out the signature. IRS identity protection pin for Alan is 123456 and for Rebecca, 987654.