Joseph P. Smith and his wife Gladys G. Smith are married and file a joint return for 2018. Josephs social security number is 499-99-4321 and he is 44 years old. Gladys social security number is 637-44-9876 and she is 43 years old. They live at 1502 Seaman Court,

Flemington, NJ 08822.

Mr. Smith is a construction worker employed by LLL Construction.

His form W-2 from LLL Construction showed the following:

Wages $42,000

Withholding (federal) 4,500

The Smiths have a 17-year old son, Jackson, who is enrolled in the eleventh grade at Flemington Perpetual Catholic School. Jacksons social security number is 669-90-0099. The Smiths also have an 18-year old daughter, Lois, who is a full-time freshman at Oceanside Community College (OCC). Loiss social security number is 669-90-0100. Mr. and Mrs. Smith also have full custody of Josephs nephew, Larry Loser (social security number 664-66-6688) who is 18 years old and a part-time student at OCC. All three of the children live at home, and Joseph and Gladys pay the majority of expenses for Jackson, Lois, and Larry (none of the children work).

Joseph and Gladys have the following investment income for 2018:

Interest from the Trustworthy Savings Bank $47

Dividends (qualified) Seaside Bank stock 50

Dividends (qualified) Seaside Gas Company stock 2600

Dividends (non-qualified) Hot Mutual Fund 450

Interest on NJ State Municipal Bonds 75

Interest on Seaside Electric Company Bonds 675

Joseph went to the local casino and won $9800 playing the slot machines. The next day he decided to go back to the casino and unfortunately he spent (lost) $4550 that day.

One of Gladys friends died during the year and Gladys received $10,000 in life insurance proceeds.

In July, Josephs aunt died and left him a piece of real estate (undeveloped land) worth $65,000.

Five years ago, Joseph and Gladys were divorced. Joseph married Suzy Sunshine

(SS# 020-22-2222), but the marriage did not work out and they were divorced a year later. They had a child while married, Sara Sunshine (social security number 555-50-5588, age 7). Under the divorce decree, Joseph has to pay Suzy $18,000 per year until Sara reaches age 18 at which time the payment is reduced to $12,000 per year. Three years ago, Joseph and Gladys were remarried.

During 2018, Joseph spent $250 on safety glasses, $150 on steel toed work boots, $100 on a reflective vest to use while directing traffic, and $300 on jeans that he wears to work. He also spent $2250 on tools that he uses for work. LLL Construction gave him $1000 to use to purchase a demolition saw (not part of the $2250 spent on tools, and not included in his paycheck).

Joseph is tired of working in construction and went back to school, part time, in January. He spent $3600 on tuition to the local community college and has a 1098-T supporting that expense. He has never been enrolled in higher education prior to this time. He paid for the tuition using a student loan.

Gladys was laid off from her job on January 2, 2018 and received unemployment compensation of $8,000 during 2018.

Joseph and his family are covered under a health insurance plan provided by LLL Construction, and LLL pays $300 per month and Joseph pays $250 per month for this plan (the $250 is deducted pre-tax from Josephs paycheck). During the year, Gladys had an emergency appendectomy; the total bill was $22,500, the insurance covered $8,000 and Joseph and Gladys paid the remainder.

On September 1, 2018 Gladys took a job as a medical transcriptionist and works from home. She does her work on the dining room table. The house is 2000 square feet, and the dining room is 400 square feet. Her income and expenses follow:

Income (paid on a 1099-Misc) $29,050

Home office expenses (direct) $2600

Home office expenses (indirect, but not allocated) $12,000

Office expenses 1,380

Computer supplies 800

Telephone 300

Faxes (sent from Staples) 250

Internet service 480

In addition to the above items, Gladys incurred travel expenses to attend a seminar on medical transcription. She spent $600 on airfare, $450 on lodging, $325 on a rental car, and $560 on meals. Gladys has documentation for these expenses.

Gladys drove her 2014 Land Rover 2,845 miles for business related purposes, and the vehicle was driven a total of 8,646 miles during the year. Gladys uses the standard mileage rates and has substantiation for the mileage.

To do: Using the information above, complete the 1040 form for Joseph and Gladys including all additional forms and schedules. Please use 2018 forms.