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, 1991 and Maria's is December 30, 1993. 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, 2019, and their value is $10,700 on December 31, 2019. They have not made an election with respect to these bonds.

Ray has an ex-wife named Judy Gomez. Pursuant to their January 27, 2014 (pre-2019) divorce decree, Ray pays her $450 per month in alimony. All payments were made on time in 2019. Judy's Social Security number is 566-74-8765.

During 2019, 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 2019, 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 2019. Her ticket was lucky and she won $4,025. The winning amount was paid to Maria in November 2019, 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 2019. Ray never uses the car for personal purposes.

Required: Complete the Gomez's federal tax return for 2019 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

Ray anumang seammings are reported on the Tollowing For W-zs. Safe, accurate, Visit the IRS website at OMB No. 1545-0008 IRS e n file FAST! Use www.irs.gov/efile 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 30,415.00 3 Social security wages 30,415.00 5 Medicare wages and tips 30,415.00 7 Social security tips 2 Federal income tax withheld 3,070.00 4 Social security tax withheld 1,885.73 6 Medicare tax withheld 441.02 8 Allocated tips d Control number 10 Dependent care benefits Last name Suff. 11 Nonqualified plans 12a See instructions for box 12 c e Employee's first name and initial Ray Gomez 1610 Quince Avenue McAllen, TX 78701 13 Statutory employee Retirement Third-party 12b plan sick pay ID Safe, accurate, OMB No. 1545-0008 IRS e - file Visit the IRS website at www.irs.gov/efile FAST! Use a Employee's social security number 444-65-9912 b Employer identification number (EIN) 23-4444321 1 Wages, tips, other compensation 32,402.00 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 3 Social security wages 32,402.00 5 Medicare wages and tips 32,402.00 7 Social security tips 4 Social security tax withheld 2,008.92 6 Medicare tax withheld 469.83 8 Allocated tips d Control number 9 10 Dependent care benefits Last name Suff. 11 Nonqualified plans 12a See instructions for box 12 c e Employee's first name and initial Maria Gomez 1610 Quince Ave. McAllen, TX 78701 d 13 Statutory employee Retirement Third-party 12b plan sick pay 0 0 1040 U.S. Individual Income Tax Return 2019 OMB No. 1545-0074 IRS Use Only Filing Status Married filing jointly Your first name and middle initial Last name Your social security number Ray Gomez 469-21-5523 Last name Spouse's social security If joint return, spouse's first name and middle initial Gomez number Maria 444-65-9912 Home address (number and street). If you have a P.O.box, see instructions. Apt. no. Presidential Election Campaign Check here if you, or your City, town or post office, state, and ZIP code. If you have a foreign address, also complete spaces below spouse if filing jointly, want $3 to go to this fund. Checking a (see instructions). 1610 Quince Avenue box below will not change your tax or refund. None Foreign country name Foreign province/state/county Foreign postal If more than four dependents, McAllen, TX 78701 code see instructions and here Standard Someone can claim: None Deduction You: None Age/Blindness Spouse: None Dependents (see instructions): (2) Social security number (3) Relationship to you (4) / if qualifies for (see instructions): (1) First name Child tax credit Credit for other dependents Last name O O 1 62,817 2b 673 3b 1 Wages, salaries, tips, etc. Attach Form(s) W-2. b Taxable interest. Attach Sch. 2a Tax-exempt interest .. 2a B if required b Ordinary dividends. Attach 3a Qualified dividends ... 3a Sch. B if required 4a IRA distributions ..... 4a b Taxable amount c Pensions and annuities 40 d Taxable amount 5a Social security benefits 5a b Taxable amount Capital gain or loss). Attach Schedule D if required. If not required, check here ... 6 4b 4d 5b 6 Standard Deduction for- Single or Married filing separately, $12,200 Married filing jointly or Qualifying widow(er), $24,400 Head of household, $18,350 If you checked any box under Standard Deduction, see instructions. za Other income from Schedule 1, line 9.... 7a b Add lines 1, 2b, 3b, 46, 40, 56, 6, and 7a. This is your total income 7b 8a Adjustments to income from Schedule 1, line 22 ga b Subtract line 8a from line 7b. This is your adjusted gross income 8b 9 Standard deduction or itemized deductions (from Schedule A)...... 9 10 Qualified business income deduction. Attach Form 8995 or Form 8995-A.. 10 10 Qualified business income deduction. Attach Form 8995 or Form 8995-A. 10 11a 11a Add lines 9 and 10 b Taxable income. Subtract line 11a from line 8b ..... For Disclosure, Privacy Act, and Paperwork Reduction Act Notice, see separate instructions. 11b Cat. No. 11320B Form 1040 (2019) Form 1040 (2019) Page 2 12a 12b 12a Tax (see inst.) Check if any from Form(s): 108814 2 0 4972 30 b Add Schedule 2, line 3, and line 12a and enter the total. 13a Child tax credit or credit for other dependents .. 13a b Add Schedule 3, line 7, and line 13a and enter the total . 14 Subtract line 13b from line 12b. If zero or less, enter-O- Other taxes, including self-employment tax, from Schedule 2, line 10. Add lines 14 and 15. This is your total tax. 13b 14 15 15 16 16 17 Federal income tax withheld from Forms W-2 and 1099. 17 18 Other payments and refundable credits: .. . If you have a qualifying child, attach Sch. EIC. If you have nontaxable a Earned income credit (EIC) 18a . b Additional child tax credit. Attach Schedule 8812 18b 19 Add lines 17 and 18e. These are your total payments .. 19 Refund 20 20 If line 19 is more than line 16, subtract line 16 from line 19. This is the amount you overpaid 21a Amount of line 20 you want refunded to you. If Form 8888 is attached, check here 21a Direct deposit? Routing number c Type: Checking Savings See instructions. d Account number 22 Amount of line 20 you want applied to your 2020 estimated tax 22 23 Amount Amount you owe. Subtract line 19 from line 16. For details on how to pay, see instructions 23 You Owe 24 Estimated tax penalty (see instructions) ......... 24 Third Party Do you want to allow another person (other than your paid preparer) to discuss this return Yes. Complete with the IRS? See instructions. below. Designee O No Designee's Phone (Other than paid preparer) Personal identification number (PIN) name no. Sign Here Under penalties of perjury, I declare that I have examined this return and accompanying schedules and statements, and to the best of my knowledge and belief, they are true, correct, and complete. Declaration of preparer (other than taxpayer) is based on all information of which preparer has any knowledge. Your signature Date Your occupation If the IRS sent you an Identity Protection PIN, enter it here Joint return? 1 Part I Additional Income 1 Taxable refunds, credits, or offsets of state and local income taxes 2a Alimony received ..... Date of original divorce or separation agreement (see instructions) 2a b 3 3 4 Business income or loss). Attach Schedule C. Other gains or losses). Attach Form 4797 .. Rental real estate, royalties, partnerships, S corporations, trusts, etc. Attach Schedule E... 4 5 5 6 6 7 Farm income or loss). Attach Schedule F Unemployment compensation .... Other income. List type and amount 7 8 Lottery winnings 8 9 10 11 9 Combine lines 1 through 8. Enter here and on Form 1040 or 1040-SR, line 7a Part II Adjustments to Income 10 Educator expenses. Certain business expenses of reservists, performing artists, and fee-basis government officials. Attach Form 2106... 12 Health savings account deduction. Attach Form 8889. 13 Moving expenses for members of the Armed Forces. Attach Form 3903 Deductible part of self-employment tax. Attach Schedule SE 11 12 13 14 14 Ray anumang seammings are reported on the Tollowing For W-zs. Safe, accurate, Visit the IRS website at OMB No. 1545-0008 IRS e n file FAST! Use www.irs.gov/efile 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 30,415.00 3 Social security wages 30,415.00 5 Medicare wages and tips 30,415.00 7 Social security tips 2 Federal income tax withheld 3,070.00 4 Social security tax withheld 1,885.73 6 Medicare tax withheld 441.02 8 Allocated tips d Control number 10 Dependent care benefits Last name Suff. 11 Nonqualified plans 12a See instructions for box 12 c e Employee's first name and initial Ray Gomez 1610 Quince Avenue McAllen, TX 78701 13 Statutory employee Retirement Third-party 12b plan sick pay ID Safe, accurate, OMB No. 1545-0008 IRS e - file Visit the IRS website at www.irs.gov/efile FAST! Use a Employee's social security number 444-65-9912 b Employer identification number (EIN) 23-4444321 1 Wages, tips, other compensation 32,402.00 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 3 Social security wages 32,402.00 5 Medicare wages and tips 32,402.00 7 Social security tips 4 Social security tax withheld 2,008.92 6 Medicare tax withheld 469.83 8 Allocated tips d Control number 9 10 Dependent care benefits Last name Suff. 11 Nonqualified plans 12a See instructions for box 12 c e Employee's first name and initial Maria Gomez 1610 Quince Ave. McAllen, TX 78701 d 13 Statutory employee Retirement Third-party 12b plan sick pay 0 0 1040 U.S. Individual Income Tax Return 2019 OMB No. 1545-0074 IRS Use Only Filing Status Married filing jointly Your first name and middle initial Last name Your social security number Ray Gomez 469-21-5523 Last name Spouse's social security If joint return, spouse's first name and middle initial Gomez number Maria 444-65-9912 Home address (number and street). If you have a P.O.box, see instructions. Apt. no. Presidential Election Campaign Check here if you, or your City, town or post office, state, and ZIP code. If you have a foreign address, also complete spaces below spouse if filing jointly, want $3 to go to this fund. Checking a (see instructions). 1610 Quince Avenue box below will not change your tax or refund. None Foreign country name Foreign province/state/county Foreign postal If more than four dependents, McAllen, TX 78701 code see instructions and here Standard Someone can claim: None Deduction You: None Age/Blindness Spouse: None Dependents (see instructions): (2) Social security number (3) Relationship to you (4) / if qualifies for (see instructions): (1) First name Child tax credit Credit for other dependents Last name O O 1 62,817 2b 673 3b 1 Wages, salaries, tips, etc. Attach Form(s) W-2. b Taxable interest. Attach Sch. 2a Tax-exempt interest .. 2a B if required b Ordinary dividends. Attach 3a Qualified dividends ... 3a Sch. B if required 4a IRA distributions ..... 4a b Taxable amount c Pensions and annuities 40 d Taxable amount 5a Social security benefits 5a b Taxable amount Capital gain or loss). Attach Schedule D if required. If not required, check here ... 6 4b 4d 5b 6 Standard Deduction for- Single or Married filing separately, $12,200 Married filing jointly or Qualifying widow(er), $24,400 Head of household, $18,350 If you checked any box under Standard Deduction, see instructions. za Other income from Schedule 1, line 9.... 7a b Add lines 1, 2b, 3b, 46, 40, 56, 6, and 7a. This is your total income 7b 8a Adjustments to income from Schedule 1, line 22 ga b Subtract line 8a from line 7b. This is your adjusted gross income 8b 9 Standard deduction or itemized deductions (from Schedule A)...... 9 10 Qualified business income deduction. Attach Form 8995 or Form 8995-A.. 10 10 Qualified business income deduction. Attach Form 8995 or Form 8995-A. 10 11a 11a Add lines 9 and 10 b Taxable income. Subtract line 11a from line 8b ..... For Disclosure, Privacy Act, and Paperwork Reduction Act Notice, see separate instructions. 11b Cat. No. 11320B Form 1040 (2019) Form 1040 (2019) Page 2 12a 12b 12a Tax (see inst.) Check if any from Form(s): 108814 2 0 4972 30 b Add Schedule 2, line 3, and line 12a and enter the total. 13a Child tax credit or credit for other dependents .. 13a b Add Schedule 3, line 7, and line 13a and enter the total . 14 Subtract line 13b from line 12b. If zero or less, enter-O- Other taxes, including self-employment tax, from Schedule 2, line 10. Add lines 14 and 15. This is your total tax. 13b 14 15 15 16 16 17 Federal income tax withheld from Forms W-2 and 1099. 17 18 Other payments and refundable credits: .. . If you have a qualifying child, attach Sch. EIC. If you have nontaxable a Earned income credit (EIC) 18a . b Additional child tax credit. Attach Schedule 8812 18b 19 Add lines 17 and 18e. These are your total payments .. 19 Refund 20 20 If line 19 is more than line 16, subtract line 16 from line 19. This is the amount you overpaid 21a Amount of line 20 you want refunded to you. If Form 8888 is attached, check here 21a Direct deposit? Routing number c Type: Checking Savings See instructions. d Account number 22 Amount of line 20 you want applied to your 2020 estimated tax 22 23 Amount Amount you owe. Subtract line 19 from line 16. For details on how to pay, see instructions 23 You Owe 24 Estimated tax penalty (see instructions) ......... 24 Third Party Do you want to allow another person (other than your paid preparer) to discuss this return Yes. Complete with the IRS? See instructions. below. Designee O No Designee's Phone (Other than paid preparer) Personal identification number (PIN) name no. Sign Here Under penalties of perjury, I declare that I have examined this return and accompanying schedules and statements, and to the best of my knowledge and belief, they are true, correct, and complete. Declaration of preparer (other than taxpayer) is based on all information of which preparer has any knowledge. Your signature Date Your occupation If the IRS sent you an Identity Protection PIN, enter it here Joint return? 1 Part I Additional Income 1 Taxable refunds, credits, or offsets of state and local income taxes 2a Alimony received ..... Date of original divorce or separation agreement (see instructions) 2a b 3 3 4 Business income or loss). Attach Schedule C. Other gains or losses). Attach Form 4797 .. Rental real estate, royalties, partnerships, S corporations, trusts, etc. Attach Schedule E... 4 5 5 6 6 7 Farm income or loss). Attach Schedule F Unemployment compensation .... Other income. List type and amount 7 8 Lottery winnings 8 9 10 11 9 Combine lines 1 through 8. Enter here and on Form 1040 or 1040-SR, line 7a Part II Adjustments to Income 10 Educator expenses. Certain business expenses of reservists, performing artists, and fee-basis government officials. Attach Form 2106... 12 Health savings account deduction. Attach Form 8889. 13 Moving expenses for members of the Armed Forces. Attach Form 3903 Deductible part of self-employment tax. Attach Schedule SE 11 12 13 14 14