For 2018 Tax Code: Assume that the taxpayers, George A. Warden (social security number 333-33-3330) and Mary S. Warden (social security number 444-44-4440) file a joint return. Both are 50-years old, have good eyesight, and live with their three children, Edward, John and Ruth, at 789 N.Code Drive, Chicago, Illinois 60699. The Wardens home phone number is 312-555-9999. Mr. Warden elects to have $3 of his income tax go to the Presidential Election Campaign Fund. Mrs. Warden elects not to contribute. If there is any refunds of taxes, the Wardens wish to apply this forward to their 2019 tax year as they expect a huge increase in income.

The Wardens oldest son, Edward, is 20 years old and a student at the University of Finance and Accounting. He worked during the summer and earned $4,000. Their other son, John, is 17 and a high school student. He earned $3,600 working full-time during the summer and part-time during the remainder of the year. Neither son had any additional income. Their daughter, Ruth, is eight years old and an elementary school student. She had no earned or unearned income during the year. Edwards social security number is 300-11-0001, Johns social security number is 300-22-0002, and Ruths social security number is 300-33-0003.

Mrs. Grace D. Taylor lived with the Wardens during all of 2016. Her social security number is 400-44-0004. Thelma Taylor provides the Wardens with a written, signed statement, that she will not claim her mother as a dependent in 2018. Thelma Taylor lives at 1425 S. 62nd Street, Chicago, IL 60699, and her social security number is 500-55-0005.

Please ignore the child or other dependent credit.

During 2018, Mrs. Warden was employed as a salesperson by XPert Publishing Inc. Her Form W-2 for 2018 reports the following: Box 1. Wages, tips and other compensation $75,000 Box 2. Federal income tax withheld $2,950 Box 4. FICA tax withheld $4,650 Box 6. Medicare tax withheld $1,088 Box 17. State income tax $2,250

The Wardens made federal estimated tax payments of $2,000 for 2018.

The Wardens incurred the following medical expenses during 2018: prescription drugs, $10,000; doctor bills, $3,550; hospital bills, $2,750; transportation, $100; and eyeglasses, $800.

The Wardens paid their 2017 real estate taxes of $1,810 on July 1, 2018. In addition, they sold their residence on September 13, 2018. The Wardens occupied the home for 70% of the 2018 real estate tax calendar year when the estimated real estate taxes were $2,000. The real estate taxes on the new property they purchased on May 1, 2018, are not payable until 2019. There was no taxable gain on the sale of their prior residence. Mr. and Mrs. Warden paid $9,850 in deductible home mortgage interest to a bank. They also paid $3,000 in points when they purchased their new home. They paid the following personal interest in 2018: $600 to finance Mrs. Wardens car, and $400 in credit card interest.

The Wardens gave $2,500 in cash to various recognized charities; no individual gift was $250 or more; all charities sent an acknowledgment of the contribution.

Form 1040, Schedule B

During 2018, the Wardens received $500 in interest from the Heartland National Bank and $150 from the Third National Savings and Loan. They received $200 in interest from tax-exempt bonds issued by the state of Illinois. The Wardens received the following qualified dividends: $400 from Rambling Motorcycles, Inc., $300 from Secure Fund, and $250 from Rapid Growth Mutual Fund. The responses to the questions on Part III of Schedule B are No. Ignore any special tax rate for qualified dividends when calculating tax liability.

Form 1040, Schedule E

Mr. and Mrs. Warden own and rent a brick two-flat apartment building located at 12 West 5th Ave., Chicago, Illinois 60626. The apartment building is not used for personal purposes by either the Wardens or members of their family and was rented at fair rental value for the entire year. Mr. Warden actively participates in the operation of the building. The Wardens received rents of $12,000 in 2018. Their expenses are as follows: cleaning and maintenance, $2,500; mortgage interest, $4,000; repairs, $750; advertising, $500; insurance, $1,000 and real estate taxes, $1,250.

The Wardens purchased the apartment building in January of 2015 for $167,750. They also purchased furniture at the same time for $35,000. Please determine current depreciation and report on Form 4562.

The Wardens did not make any payments that required them to file Form(s) 1099.

You will need to complete the federal tax return for the Wardens using the following: Schedule B Link (Links to an external site.)Links to an external site., Schedule E Link (Links to an external site.)Links to an external site., Schedule A Link (Links to an external site.)Links to an external site., Form 8582 Link (Links to an external site.)Links to an external site., Schedule 1 Link (Links to an external site.)Links to an external site., Schedule 5 Link (Links to an external site.)Links to an external site., Form 4562 Link (Links to an external site.)Links to an external site., Form 1040 Link (Links to an external site.)Links to an external site.. Please include any calculations which you have done for which details are not shown on the tax forms.