INDIVIDUAL TAX RETURN PROBLEM 2Required:

• Use the following information to complete Johnelle and Latoya Henry's 2016federal income tax return. If information is missing, use reasonable assumptions to fill in the gaps.
• You may need the following forms to complete the project: Form 1040 and Schedule A. The forms, schedules, and instructions can be found at the IRS Web site (www.irs.gov). The instructions can be helpful in completing the forms.

Facts:

1. 1.
2. JohnelleHenryisemployedasahumanresourcesmanagerforToysUnlimited,Inc.,andLatoyaisafinancialplannerforhermother'scompany,Long-termInvestments,Inc.,afull-servicewealth-planningfirm.Theyprovidethefollowinginformation:
   • Theybothwanttocontributetothepresidentialelectioncampaign.
   • Theyliveat9876OldWaverly,Charleston,SouthCarolina.
   • • Johnelle'sbirthdayis7/17/1965andhisSocialSecuritynumberis555-12-6789.
     • Latoya'sbirthdayis9/11/1967andherSocialSecuritynumberis987-65-4321.
     • JohnelleorLatoyadonothaveanyforeignbankaccountsortrusts. 2.
   1. JohnellereceivedaFormW-2fromToysUnlimited,Inc.thatcontainedthefollowinginformation:

      Line1Wages,tips,othercompensation:	$45,000
      Line2Federalincometaxwithheld:	7,500
      Line3SocialSecuritywages:	45,000
      Line4SocialSecuritytaxwithheld:	2,790
      Line5Medicarewagesandtips:	45,000
      Line6Medicaretaxwithheld:	653
      Line17Stateincometax:	2,200

      3.
   2. LatoyareceivedaFormW-2fromLong-termInvestments,Inc.thatcontainedthefollowinginformation:

      Line1Wages,tips,othercompensation:	$85,000
      Line2Federalincometaxwithheld:	12,500
      Line3SocialSecuritywages:	85,000
      Line4SocialSecuritytaxwithheld:	5,270
      Line5Medicarewagesandtips:	85,000
      Line6Medicaretaxwithheld:	1,233
      Line17Stateincometax:	4,200

      4.
   3. JohnelleandLatoyaincurredthefollowingmedicalexpensesfortheyear:

      TransportationtoChicagoforJohnelle'scancertreatment:	2,000miles
      UnreimbursedhospitalchargesforJohnelle:	$6,500
      UnreimbursedprescriptiondrugchargesforJohnelleandLatoya:	1,750
      UnreimbursedphysicianchargesforJohnelleandLatoya:	2,200
      UnreimbursedprescriptionglassesforLatoya:	150
      LaserhairtreatmentforLatoya(sothatshewillnolongerneedtoshaveherlegs)	2,000

      5.
   4. JohnelleandLatoyapaid$12,000ofinterestpaymentsontheirprimaryresidence(acquisitiondebtof$225,000).Theyalsopaid$1,750ofinterestexpenseonLatoya'scarloanand$500ofinterestontheirVisacard. 6.
   5. JohnelleandLatoyapaid$4,000ofrealestatetaxesontheirhomeand$1,000ofrealestatetaxonavacantlottheypurchasedwiththehopeofbuildingtheirdreamhomeinthefuture.Theyalsopaid$3,000insalestaxonLatoya'scarandotherpurchasesand$1,000ofadvaloremtaxontheircars. 7.
   6. JohnelleandLatoyamadethefollowingcontributionsthisyear:

      AmericanRedCross	$200
      UnitedWay	150
      St.Joseph'sCatholicChurch	8,000
      FoodforthefamilyofHannahBarbara(aneighborwhosufferedatragiccaraccidentthispastyear)	225
      StocktransfertotheUniversityofSouthCarolina(originallypurchasedfor$1,000in2005)	750

8.

1. Johnelleincurred$4,000ofunreimbursedmealsandentertainmentrelatedtohisjob.Latoyaincurred$1,200ofexpensesforinvestmentpublications,andlastyeartheypaidtheirCPA$500topreparetheirtaxreturn.
2. 9.
3. TheroofonJohnelleandLatoya'shousewasseverelydamagedinahailstorm.Theyhadtoreplacetheroof($7,500),whichunfortunatelywasnotcoveredbyinsurancebecauseoftheirhighdeductible($10,000).
4. 10.
5. Johnellewon$5,000inthestatelottery.Hehasbeenplayingthelotteryforyears[$10inlotteryticketseveryweek($520intotal)thathesavestokeeptrackofthenumbersheplays].
6. 11.
7. JohnelleandLatoyahavequalifyinginsuranceforpurposesoftheAffordableCareAct(ACA).

Thank you