Chris and Stefani Watanabe live with their two boys at 1400 Victoria Lane, Riverside, CA 92501. Chris is an accountant who has his own accounting practice. Stefani is an elementary school teacher. Their sons, Justin and Jordan, are ages 13 and 10, respectively. The following is additional information regarding the Watanabes. Social security numbers for the Watanabe family:

Chris 412-34-5670

Stefani 412-34-5671

Justin 412-34-5672

Jordan 412-34-5673

They paid $4,500 to Friendly Hills Child Care center for after-school care for both Justin and Jordan, allocated equally. The address is 2 River Dr, Riverside, CA 92501 and their ID number is 22-1234567.

Stefanis W-2 from the Riverside school district showed the following:

Wages = $ 56,925.04

Federal W/H = $ 9,085.90

Social Security wages = $ 56,925.04

Social Security W/H = $ 3,529.35

Medicare Wages = $ 56,925.04

Medicare W/H = $ 825.41

California W/H = $ 2,105.75

Chris's accounting business is located in downtown Riverside. His business had the following income and expense information for the year:

Gross revenues $ 165,000

Expenses:

Advertising $ 2,100

Insurance 1,200

Legal fees 10,500

Office supplies 800

Rent 24,000

Travel 6,945

Meals 2,400

Utilities 2,800

Wages 34,000

Dues 650

Additionally, Chris and Stefani paid the following expenses during the year:

Medical and dental expenses $ 4,500

Property tax (home on Victoria Lane) 3,750

State income taxes with the 2017 return 3,900

Donations to the church (cash) 3,500

Mortgage interest (home on Victoria Lane) 16,900

Stefani paid $950 in classroom expenses for her class Chris and Stefani also earned $975 of interest income from California Bank during the year.

Lastly, Chris and Stefani own a three-bedroom cabin in Big Bear Lake (they bought it in January of 2006 for $300,000). The address is 3105 Stonehedge Road, Big Bear Lake, CA 92315. They did not use the property for personal use at any time during the year. The revenue and expenses for the Big Bear Lake rental property are as follows:

Rental income $ 18,000

Expenses: Insurance $ 1,200

Property taxes 2,500 Auto (standard mileage) 267

Management fees 1,600

Repairs and maintenance 1,100

Mortgage interest 9,000

Depreciation Calculate

Utilities 450

The Watanabes also made $15,000 and $9,000 in federal and California estimated income tax payments on 12/31/18, respectively, during the year.

Prepare the Watanabes federal tax return for 2018. Use Form 1040, Schedule A, Schedule C, Schedule E, Schedule SE, and any additional schedules or forms they may need. The Watanabes had qualifying health care coverage at all times during the tax year. They do not want to contribute to the presidential election campaign, and they do not want anyone to be a third-party designee. For any missing information, make reasonable assumptions. (List the names of the taxpayers and any income they receive in the order in which they appear in the problem. Input all the values as positive numbers unless otherwise stated in the forms. Instructions can be found on certain cells within the forms. Round all intermediate calculations and your final answers to the nearest whole dollar amount.)