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John L Brown (Social Security number 310 40 1715) is 67 years old and is married to Jackie S Brown (Social Security number 310 50


John L Brown (Social Security number 310 40 1715) is 67 years old and is married to Jackie S Brown (Social Security number 310 50 3333), age 57. The Browns live at 1246 Martin Drive, Atlanta, GA 30039. They file a joint return and have three dependent children (Maria, Michael and Megan). Maria is 10 years (SSN 310 22 4444), Michael is 12 (SSN 310 33 5555), and Megan is 14 (SSN 310 44 6666). Megan appeared in a commercial and earned $15,000 during the year. John and Jackie also provided over 50% of the support for Jackie's cousin, Jeffery, who did not live with them the entire year. All dependents were covered by medical insurance.

During the year, John and Jackie had the following transactions.

  1. John received $70,000 in salary from Great Steel Company. Withholding for Federal income tax was $18,000. The proper amount of FICA taxes was withheld.

  2. John and Jackie received $1,200 of interest on U.S. government bonds and $600 of interest on Atlanta Country Schools Bonds.

  3. In the prior year Jackie was involved in an automobile accident and incurred $12,000 of medical expenses. Insurance paid $8,000 of the expenses, and John and Jackie included the remaining $4,000 in the determination of their prior year's taxable income. During the year, Jackie received a settlement from the other driver's insurance company. She received $12,000 for her medical expenses, $65,000 as compensatory damages for physical injury, and $35,000 of punitive damages.

  4. Jackie received 10 shares of Internet, Inc., as a stock dividend. The shares received had a fair market value of $360. Jackie had the option of receiving cash equal to the value of the shares for half of the shares. She chose not to receive cash.

  5. John paid $6,500 of alimony to his wife, Andrea Wagner (Social Security number 382 80 2691).

  6. John and Jackie other expenses were as follows:
  • State income taxes paid and withheld totaled $4,000
  • Real estate taxes on their principal residence were $3,500.
  • Georgia sales taxes on consumer goods and services equal $3,700.
  • Interest on their principal residence was $3,600.
  • Cash contributions to the church were $2,200.

The proper amount of FICA was withheld from the earnings of Michael and Maria. However, no Federal income tax was withheld from their earnings. John and Jackie took the standard deduction in the prior tax year.

Prepare the Income tax Return for the current year for the Brown's family. Use Form 1040 and any other related forms.

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