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, while Wanda is employed part-time as a paralegal for a law firm. During 2016, the Deans had the following receipts:

1. Salaries ($60,000 for Lance, $41,000 for Wanda) = $101,000
2. Interest income? City of Albuquerque general purpose bonds = $1,000
3. Ford Motor company bonds = 1,100
4. Ally Bank certificate of deposit = 400
5. Child support payments from John Allen = 7,200
6. Annual gifts from parents = 26,000
7. Settlement from Roadrunner Touring Company = 90,000
8. Lottery winnings = 600
9. Federal income tax refund (for tax year 2015) = 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 waiver.) 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. 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 $90,000 to her in settlement of the personal injuries she sustained.

The Deans had the following expenditures for 2016:

1. Medical expenses (not covered by insurance) = $7,200
2. Taxes? Property taxes on personal residence = $3,600
3. State of New Mexico income tax (includes amount withheld from wages during 2016) = 4,200
4. Interest on home mortgage (First National Bank) = 6,000
5. Paid church pledge = 3,600
6. Life insurance premiums (policy on Lance's life) = 1,200
7. Contribution to traditional IRA (on Wanda's behalf) = 5,000
8. Traffic fines= 300
9. Contribution to the reelection campaign fund of the mayor of Santa Fe = 500
10. 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 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

1. Lance Dean (age 42) - 123-45-6786 12/16/1974
2. Wanda Dean (age 40) - 123-45-6787 08/08/1976
3. Penny Allen (age 19) -123-45-6788 10/09/1997
4. Kyle Allen (age 17) - 123-45-6789 05/03/1999
5. Wayne Boyle (age 75) - 123-45-6785 06/15/1941

Penny graduated from high school on May 9, 2016, and is undecided about college. During 2016, 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 January 20, 2016. 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.

QUESTION

Determine the Federal income tax for 2016 for the Deans on a joint return by completing the appropriate forms. They do not want to contribute to the Presidential Election Campaign Fund. All members of the family had health care coverage for all of 2016. If an overpayment results, it is to be refunded to them.

ENTER ALL VALUES AS POSITIVE - DEDUCTIONS WILL BE AUTOMATICALLY CALCULAT ENTER ALL VALUES IN BLACKBOARD AS WHOLE NUMBERS (NO PENNIES) WITHOUT 2016 - Form 1040 Gross Income: Salaries (Lance) Salaries (Wanda) City of Albuquerqe general purpose bonds Ford Motor company bonds Ally Bank certificate of deposit Child support payments from John Allen Annual gifts from parents Settlement from Roadrunner Touring Company Lottery winnings Federal income tax refund (for tax year 2011) Gross Income (subtotal): 0 0 0 0 0 0 0 0 0 0 0 Deductions for AGI: Life insurance premiums (policy on Lance's life) Contribution to traditional IRA (on Wanda's behalf) Traffic fines Contribution to the reelection campaign fund Funeral expenses for Wayne Boyle Deductions for AGI (subtotal): 0 0 0 0 0 0 ADJUSTED GROSS INCOME: 0 Deductions from AGI: Medical expenses (not covered by insurance) Property taxes on personal residence State of New Mexico income tax Interest on home mortgage Paid church pledge 0 0 0 0 0 Personal and Dependent Exemptions: Lance Dean (age 42) Wanda Dean (age 40) 0 0 Penny Allen (age 19) Kyle Allen (age 17) Wayne Boyle (age 75) Total Itemized and Exemptions 0 0 0 0 TAXABLE INCOME: 0 Tax liability Less: FIT withholding 0 0 NET BALANCE DUE (REFUND) 0 ATICALLY CALCULATED AS A SUBTRACTION PENNIES) WITHOUT A DOLLAR SIGN POINTS 0.5 Maried Filing Joint 2016 Taxable Income Tax Liability $ $ Single - ### - $ 0.5 1 Maried Filing Joint Bracket Rate 0.5 Single Bracket Rate 0.5 First $ 18,550 10.0% $ 9,275 10.0% 1 Second $ 75,300 15.0% $ 37,650 15.0% 1 Third $ 151,900 25.0% $ 91,150 25.0% 1 Fourth $ 231,450 28.0% $ 190,150 28.0% 1 Fifth $ 413,350 33.0% $ 413,350 33.0% 1 Sixth $ 466,950 35.0% $ 415,050 35.0% Seventh $ 466,950 39.6% $ 415,050 39.6% NOTE: 0.5 1 0.5 0.5 0.5 11 ELEVEN POINTS 2 0.5 0.5 0.5 1 0.5 1 USE THE RATE SCHEDULES ABOVE EVEN THOUGH, BASED UPPON THI THEY SHOULD USE THE INCOME TAX TABLES. 1 1 1 9 NINE POINTS 4 1 5 FIVE POINTS Head of Household $ $ Maried Filing Separate - $ $ - Head of Household Bracket Rate Maried Filing Separate Bracket Rate $ 13,250 10.0% $ 9,275 10.0% $ 50,400 15.0% $ 37,650 15.0% $ 130,150 25.0% $ 75,950 25.0% $ 210,800 28.0% $ 115,725 28.0% $ 413,350 33.0% $ 206,675 33.0% $ 441,000 35.0% $ 233,475 35.0% $ 441,000 39.6% $ 233,475 39.6% BASED UPPON THIS TAXPAYER'S INCOME LEVEL