.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 Com- merce, while Wanda is employed part-time as a paralegal for a law firm. During 2014, the Deans recorded 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 2013) $400 Wanda previously was 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 waiver.) Under the divorce decree, John was obligated to pay alimony and child supportthe 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. As 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 to her $90,000 cash in settlement of the personal injuries she sustained. Computing the Tax 3-45 The Deans made the following 2014 expenditures. Medical expenses (not covered by insurance) $7,200 Taxes Property taxes on personal residence 3,600 State of New Mexico income tax (includes amount withheld from wages during 2014) 4,200 7,800 Interest on home mortgage 6,000 Paid church pledge 3,600 Life insurance premiums (policy on Lances life) 1,200 Contribution to traditional IRA (on Wandas behalf) 5,000 Traffic fines 300 Contribution to the reelection campaign fund of the mayor of Santa Fe 500 Funeral expenses for Wayne Boyle 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 employers pension plan. Consequently, she provides for her own retire- ment 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 Dean household includes the following, for whom they provide more than half of the support. SSN Birth Date Names 123-45-6786 12/16/1972 Lance Dean (age 42) 123-45-6787 08/08/1974 Wanda Dean (age 40) 123-45-6788 10/09/1995 Penny Allen (age 19) 123-45-6789 05/03/1997 Kyle Allen (age 17) 123-45-6785 06/15/1938 Wayne Dean (age 75) Penny graduated from high school on May 9, 2014, and is undecided about college. This year, she earned $8,500 (placed in a savings account) playing a harp in the lobby of a local hotel. Wayne is Lances widower father who died on January 20, 2014. For the past few years, Wayne qualified as a dependent of the Deans. Federal income tax withheld is $5,200 (Lance) and $3,100 (Wanda). The proper amount of Social Security and Medicare tax was withheld. All members of the family were covered by health insurance for all of 2014. Determine the 2014 Federal income tax for the Deans on a joint return by completing the appropriate forms. They do not want to contribute to the Presidential Election Campaign Fund. If an overpayment results, it is to be refunded to them.