Comprehensive Problem 2-2A

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, 1992 and Maria's is December 30, 1994. Ray and Maria each received a W-2 from their respective employers (see separate tab).

Ray and Maria have interest income from McAllen State Bank which is reported a 1099-INT form (see separate tab). In addition, they own U.S. Savings bonds (Series EE). The bonds had a value of $10,000 on January 1, 2020, and their value is $10,700 on December 31, 2020. They have not made an election with respect to these bonds.

Ray has an ex-wife named Judy Gomez. Pursuant to their January 27, 2015 (pre-2019) divorce decree, Ray pays her $450 per month in alimony. All payments were made on time in 2020. Judy's Social Security number is 566-74-8765.

During 2020, 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 2020, Maria's father died. Under a life insurance policy owned and paid for by her father, Maria was paid death benefits of $25,000. She used $7,800 to cover a portion of the funeral costs for her father.

Maria bought a Texas lottery ticket on impulse during 2020. Her ticket was lucky and she won $4,432. The winning amount was paid to Maria in November 2020, 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 2020. Ray never uses the car for personal purposes.

Ray and Maria received a $2,400 EIP in 2020.

*****Required:

USING ABOVE INFORMATION Complete the Gomez's federal tax return for 2020 on Form 1040 and Schedule 1. The Gomez's had health care coverage the entire year. They do not want to make a contribution to the presidential election campaign. Make any other realistic assumptions about any missing data. If an amount box does not require an entry or the amount is zero, enter "0". Enter amounts as positive numbers. If required, round amounts to the nearest dollar.

Ray and Maria's earnings are reported on the following Forms W-2: OMB No. 1545-0008 Safe, accurate, FAST! Use a Employee's social security number 469-21-5523 b Employer identification number (EIN) 21-7654321 C Employer's name, address, and ZIP code Palm Oil Corporation 11134 E. Pecan Blvd. McAllen, TX 78501 1 Wages, tips, other compensation 30,660.00 3 Social security wages 30,660.00 5 Medicare wages and tips 30,660.00 7 Social security tips Visit the IRS website at IRS e n file www.irs.gov/efile 2 Federal income tax withheld 2,996.00 4 Social security tax withheld 1,900.92 6 Medicare tax withheld 444.57 8 Allocated tips d Control number 10 Dependent care benefits 12a See instructions for box 12 e Employee's first name and initial Last name Suff. 11 Nonqualified plans Ray Gomez 1610 Quince Avenue McAllen, TX 78701 c O d e 13 Statutory employee Retirement Third-party 12b plan sick pay C 0 d ID 14 Other 12c 0 O d ID 12d Department of the Treasury-Internal Revenue Service Form W-2 Wage and Tax Statement 2020 Copy B-To Be Filed With Employee's FEDERAL Tax Return. This information is being furnished to the Internal Revenue Service. OMB No. 1545-0008 Safe, accurate, FAST! Use a Employee's social security number 444-65-9912 b Employer identification number (EIN) 23-4444321 Visit the IRS website at IRS e n file www.irs.gov/efile 2 Federal income tax withheld 2,654.00 c Employer's name, address, and ZIP code City of McAllen 1300 W. Houston Ave. McAllen, TX 78501 1 Wages, tips, other compensation 32,500.00 3 Social security wages 32,500.00 5 Medicare wages and tips 32,500.00 7 Social security tips 4 Social security tax withheld 2,015.00 6 Medicare tax withheld 471.25 8 Allocated tips d Control number 10 Dependent care benefits 12a See instructions for box 12 e Employee's first name and initial Last name Suff. 11 Nonqualified plans Maria Gomez 1610 Quince Ave. McAllen, TX 78701 c O d 13 Statutory employee Third-party 12b Retirement plan sick pay c O d ID 14 Other 12c 0 Ray and Maria have interest income as reported on the following 1099-INT: CORRECTED (if checked) PAYER'S name, street address, city or town, state or province, country, ZIP or foreign postal code, and telephone no. Payer's RTN (optional) OMB No. 1545-0112 Interest 2020 1 Interest income Income McAllen State Bank 3302 N. 10th Street McAllen, TX 78501 $ 147.12 Form 1099-INT 2 Early withdrawal penalty PAYER'S TIN RECIPIENT'S TIN $ 3 Interest on U.S. Savings Bonds and Treas. obligations Copy B 34-7657651 444-65-9912 $ For Recipient 5 Investment expenses RECIPIENT'S name Maria Gomez 4 Federal income tax withheld $ 6 Foreign tax paid 7 Foreign country or U.S. possession Street address (including apt. no.) 1610 Quince Avenue 8 Tax-exempt interest 9 Specified private activity bond interest This is important tax information and is being furnished to the IRS. If you are required to file a return, a negligence penalty or other sanction may be imposed on you if this income is taxable and the IRS determines that it has not been reported. $ City or town, state or province, country, and ZIP or foreign postal code McAllen, TX 78701 $ 10 Market discount 11 Bond premium FATCA filing requirement $ 12 Bond premium on Treasury obligations 13 Bond premium on tax-exempt bond