Instructions Note: This problem is for the 2019 tax year. Lance H. and Wanda B. Dean are married and live at 431 Yucca Drive, Santa Fe, NM 87501. Lance works for the convention bureau of the local Chamber of Commerce, and Wanda is employed part-time as a paralegal for a law firm. During 2019, the Deans had the following receipts: Salaries ($60,000 for Lance, $41,000 for Wanda) $101,000 Interest income- City of Albuquerque general purpose bonds $1,000 Ford Motor company bonds 1,100 Ally Bank certificate of deposit 400 2,500 Child support payments from John Allen 7,200 Annual gifts from parents 26,000 Settlement from Roadrunner Touring Company 90,000 Lottery winnings 600 Federal income tax refund (for tax year 2018) 400 Wanda was previously married to John Allen. When they divorced several years ago, Wanda was awarded custody of their two children, Penny and Kyle. (Note: Wanda has never issued a Form 8332 walver.) Under the divorce decree, John was obligated to pay alimony and child support-the alimony payments were to terminate if Wanda remarried. In July, while going to lunch in downtown Santa Fe, Wanda was injured by a tour bus. Because the driver was clearly at fault, the owner of the bus, Roadrunner Touring Company, paid her medical expenses (including a one-week stay in a hospital). To avoid a lawsuit, Roadrunner also transferred $90,000 to her in settlement of the personal Injuries she sustained. $7,200 $3,600 4,200 The Deans had the following expenditures for 2019: Medical expenses (not covered by insurance) Taxes- Property taxes on personal residence State of New Mexico income tax (includes amount withheld from wages during 2019) Interest on home mortgage (First National Bank) Charitable contributions Life insurance premiums (policy on Lance's life) Contribution to traditional IRA (on Wanda's behalt) Traffic fines Contribution to the reelection campaign fund of the mayor of Santa Fe Funeral expenses for Wayne Boyle 7,800 6,000 3,600 1,200 5,000 300 500 6,300 The life insurance policy was taken out by Lance several years ago and designates Wanda as the beneficiary. As a part-time employee, Wanda is excluded from coverage under her employer's pension plan. Consequently, she provides for her own retirement with a traditional IRA obtained at a local trust company. Because the mayor is a member of the local Chamber of Commerce, Lance felt compelled to make the political contribution. The Deans' household includes the following, for whom they provide more than half of the support: Social Security Number Birth Date Lance Dean (age 42) 123-45-6786 12/16/1977 Wanda Dean (age 40) 123-45-6787 08/08/1979 Penny Allen (age 19) 123-45-6788 10/09/2000 Kyle Allen (age 17) 123-45-6780 05/03/2003 Wayne Boyle (age 75) 123-45-6785 06/15/1944 Penny graduated from high school on May 9, 2019, and is undecided about college. During 2019, she earned $8,500 (placed in a savings account) playing a harp in the lobby of a local hotel. Wayne is Wanda's widower father who died on December 20, 2019. For the past few years, Wayne qualified as a dependent of the Deans. Federal income tax withheld is $3,900 (Lance) and $1,800 (Wanda). The proper amount of Social Security and Medicare tax was withheld. Required: Determine the Federal income tax for 2019 for the Deans on a joint return by completing the appropriate forms. Use Form 1040 and Schedule 1 to complete this tax return. They do not own and did not use any virtual currency during the year, and they do not want to contribute to the Presidential Election Campaign Fund. If an overpayment results, it is to be refunded to them. Make realistic assumptions about any missing data. Enter all amounts as positive numbers. If an amount box does not require an entry or the answer is zero, enter "0". Use the tax rate schedules included with this problem. When computing the tax liability, do not round your immediate calculations. If required round your final answers to the nearest dollar. Other income. List type and amount State Lottery Winnings 8 9 Combine lines 1 through 8. Enter here and on Form 1040 or 1040-SR, line 7a Part Adjustments to Income IT 10 Educator expenses 10 11 Certain business expenses of reservists, performing artists, and fee- basis government officials. Attach Form 2106 11 12 Health savings account deduction. Attach Form 8889.. 12 13 Moving expenses for members of the Armed Forces. Attach Form 3903 13 14 Deductible part of self-employment tax. Attach Schedule SE 14 15 Self-employed SEP, SIMPLE, and qualified plans 15 16 Self-employed health insurance deduction 16 17 Penalty on early withdrawal of savings. 17 Alimony paid 18a 18a b Recipient's SSN c Date of original divorce or separation agreement (see instructions) 19 IRA deduction. 19 20 Student loan interest deduction 20 21 Tuition and fees. Attach Form 8917 21 22 Add lines 10 through 21. These are your adjustments to income. Enter here and on Form 1040 or 1040-SR, line 8a. 22 BAA For Paperwork Reduction Act Notice, see your tax return instructions. Schedule 1 (Form 1040 or 1040-SR) 2019 2019 Tax Rate Schedules Single-Schedule X Head of household-Schedule z of the If taxable income is: Over- of the amount But not But not amount If taxable income is: Over- $ 0 over- The tax is: over- over- The tax is: over- $ 0 $ 9,700 10% $ 13,850 10% $ 0 9,700 9,700 39,475 $ 970.00 + 12% 13,850 52,850 $ 1,385.00 + 12% $ 0 13,850 52,850 39,475 84,200 4,543.00 + 22% 39,475 52,850 84,200 6,065.00 + 22% 84,200 160,725 14,382.50 + 24% 12,962.00 + 24% 84,200 160,725 160,700 204,100 84,200 160,700 160,725 204,100 32,748.50 + 32% 31,322.00 + 32% 84,200 160,700 204,100 510,300 204,100 510,300 510,300 46,628.50 + 35% 153,798.50 + 37% 204,100 510,300 45,210.00 + 35% 152,380.00 + 37% 204,100 510,300 510,300 Married filing jointly or Qualifying widow(er)Schedule Y-1 Married filing separately-Schedule Y-2 If taxable income is: Over- of the amount If taxable income is: Over- of the amount But not But not over- The tax is: over- over- The tax is: over- $ 0 $ 19,400 ...... 10% $ 0 $ 9,700 ...... 10% $ 0 19,400 78,950 $ 1,940.00 + 12% 9,700 39,475 $ 970.00 + 12% 9,700 78,950 9,086.00 + 22% 39,475 84,200 4,543.00 + 22% 39,475 168,400 321,450 168,400 28,765.00 + 24% $ 0 19,400 78,950 168,400 321,450 408,200 612,350 84,200 160,725 14,382.50 + 24% 84,200 321,450 408,200 65,497.00 + 32% 160,725 204,100 32,748.50 + 32% 160,725 408,200 612,350 93,257.00 + 35% 204,100 306,175 46,628.50 + 35% 204,100 612,350 164,709.50 + 37% 306,175 82,354.75 + 37% 306,175 Instructions Note: This problem is for the 2019 tax year. Lance H. and Wanda B. Dean are married and live at 431 Yucca Drive, Santa Fe, NM 87501. Lance works for the convention bureau of the local Chamber of Commerce, and Wanda is employed part-time as a paralegal for a law firm. During 2019, the Deans had the following receipts: Salaries ($60,000 for Lance, $41,000 for Wanda) $101,000 Interest income- City of Albuquerque general purpose bonds $1,000 Ford Motor company bonds 1,100 Ally Bank certificate of deposit 400 2,500 Child support payments from John Allen 7,200 Annual gifts from parents 26,000 Settlement from Roadrunner Touring Company 90,000 Lottery winnings 600 Federal income tax refund (for tax year 2018) 400 Wanda was previously married to John Allen. When they divorced several years ago, Wanda was awarded custody of their two children, Penny and Kyle. (Note: Wanda has never issued a Form 8332 walver.) Under the divorce decree, John was obligated to pay alimony and child support-the alimony payments were to terminate if Wanda remarried. In July, while going to lunch in downtown Santa Fe, Wanda was injured by a tour bus. Because the driver was clearly at fault, the owner of the bus, Roadrunner Touring Company, paid her medical expenses (including a one-week stay in a hospital). To avoid a lawsuit, Roadrunner also transferred $90,000 to her in settlement of the personal Injuries she sustained. $7,200 $3,600 4,200 The Deans had the following expenditures for 2019: Medical expenses (not covered by insurance) Taxes- Property taxes on personal residence State of New Mexico income tax (includes amount withheld from wages during 2019) Interest on home mortgage (First National Bank) Charitable contributions Life insurance premiums (policy on Lance's life) Contribution to traditional IRA (on Wanda's behalt) Traffic fines Contribution to the reelection campaign fund of the mayor of Santa Fe Funeral expenses for Wayne Boyle 7,800 6,000 3,600 1,200 5,000 300 500 6,300 The life insurance policy was taken out by Lance several years ago and designates Wanda as the beneficiary. As a part-time employee, Wanda is excluded from coverage under her employer's pension plan. Consequently, she provides for her own retirement with a traditional IRA obtained at a local trust company. Because the mayor is a member of the local Chamber of Commerce, Lance felt compelled to make the political contribution. The Deans' household includes the following, for whom they provide more than half of the support: Social Security Number Birth Date Lance Dean (age 42) 123-45-6786 12/16/1977 Wanda Dean (age 40) 123-45-6787 08/08/1979 Penny Allen (age 19) 123-45-6788 10/09/2000 Kyle Allen (age 17) 123-45-6780 05/03/2003 Wayne Boyle (age 75) 123-45-6785 06/15/1944 Penny graduated from high school on May 9, 2019, and is undecided about college. During 2019, she earned $8,500 (placed in a savings account) playing a harp in the lobby of a local hotel. Wayne is Wanda's widower father who died on December 20, 2019. For the past few years, Wayne qualified as a dependent of the Deans. Federal income tax withheld is $3,900 (Lance) and $1,800 (Wanda). The proper amount of Social Security and Medicare tax was withheld. Required: Determine the Federal income tax for 2019 for the Deans on a joint return by completing the appropriate forms. Use Form 1040 and Schedule 1 to complete this tax return. They do not own and did not use any virtual currency during the year, and they do not want to contribute to the Presidential Election Campaign Fund. If an overpayment results, it is to be refunded to them. Make realistic assumptions about any missing data. Enter all amounts as positive numbers. If an amount box does not require an entry or the answer is zero, enter "0". Use the tax rate schedules included with this problem. When computing the tax liability, do not round your immediate calculations. If required round your final answers to the nearest dollar. Other income. List type and amount State Lottery Winnings 8 9 Combine lines 1 through 8. Enter here and on Form 1040 or 1040-SR, line 7a Part Adjustments to Income IT 10 Educator expenses 10 11 Certain business expenses of reservists, performing artists, and fee- basis government officials. Attach Form 2106 11 12 Health savings account deduction. Attach Form 8889.. 12 13 Moving expenses for members of the Armed Forces. Attach Form 3903 13 14 Deductible part of self-employment tax. Attach Schedule SE 14 15 Self-employed SEP, SIMPLE, and qualified plans 15 16 Self-employed health insurance deduction 16 17 Penalty on early withdrawal of savings. 17 Alimony paid 18a 18a b Recipient's SSN c Date of original divorce or separation agreement (see instructions) 19 IRA deduction. 19 20 Student loan interest deduction 20 21 Tuition and fees. Attach Form 8917 21 22 Add lines 10 through 21. These are your adjustments to income. Enter here and on Form 1040 or 1040-SR, line 8a. 22 BAA For Paperwork Reduction Act Notice, see your tax return instructions. Schedule 1 (Form 1040 or 1040-SR) 2019 2019 Tax Rate Schedules Single-Schedule X Head of household-Schedule z of the If taxable income is: Over- of the amount But not But not amount If taxable income is: Over- $ 0 over- The tax is: over- over- The tax is: over- $ 0 $ 9,700 10% $ 13,850 10% $ 0 9,700 9,700 39,475 $ 970.00 + 12% 13,850 52,850 $ 1,385.00 + 12% $ 0 13,850 52,850 39,475 84,200 4,543.00 + 22% 39,475 52,850 84,200 6,065.00 + 22% 84,200 160,725 14,382.50 + 24% 12,962.00 + 24% 84,200 160,725 160,700 204,100 84,200 160,700 160,725 204,100 32,748.50 + 32% 31,322.00 + 32% 84,200 160,700 204,100 510,300 204,100 510,300 510,300 46,628.50 + 35% 153,798.50 + 37% 204,100 510,300 45,210.00 + 35% 152,380.00 + 37% 204,100 510,300 510,300 Married filing jointly or Qualifying widow(er)Schedule Y-1 Married filing separately-Schedule Y-2 If taxable income is: Over- of the amount If taxable income is: Over- of the amount But not But not over- The tax is: over- over- The tax is: over- $ 0 $ 19,400 ...... 10% $ 0 $ 9,700 ...... 10% $ 0 19,400 78,950 $ 1,940.00 + 12% 9,700 39,475 $ 970.00 + 12% 9,700 78,950 9,086.00 + 22% 39,475 84,200 4,543.00 + 22% 39,475 168,400 321,450 168,400 28,765.00 + 24% $ 0 19,400 78,950 168,400 321,450 408,200 612,350 84,200 160,725 14,382.50 + 24% 84,200 321,450 408,200 65,497.00 + 32% 160,725 204,100 32,748.50 + 32% 160,725 408,200 612,350 93,257.00 + 35% 204,100 306,175 46,628.50 + 35% 204,100 612,350 164,709.50 + 37% 306,175 82,354.75 + 37% 306,175