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 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 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 $90,000 to her in settlement of the personal injuries she sustained.

The Deans had the following expenditures for 2019:

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 2019)		4,200		7,800
Interest on home mortgage (First National Bank)				6,000
Charitable contributions				3,600
Life insurance premiums (policy on Lance's life)				1,200
Contribution to traditional IRA (on Wanda's 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 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)	123-45-6789	05/03/2003
Wayne Boyle (age 75)	123-45-6785	06/15/1944
*In the interest of privacy and to protect against taxpayer identification misuse, Social Security numbers used throughout the textbook have been replaced with fictitious numbers.

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 January 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.

For Disclosure, Privacy Act, and Paperwork Reduction Act Notice, see separate instructions. Form 1040 (2019) 1040 (2019) Lance H. and Wanda B. Dean 123-45-6786 Page 2 12a Tax (see inst.) Check if any from Form(s): 1 0 8814 2 0 4972 30 12a 8,844 X b Add Schedule 2, line 3, and line 12a and enter the total 12b 13a Child tax credit or credit for other dependents . 13a 0 b Add Schedule 3, line 7, and line 13a and enter the total 13b 14 Subtract line 13b from line 12b. If zero or less, enter -0- 14 0 15 Other taxes, including self-employment tax, from Schedule 2, line 10 .. 15 16 Add lines 14 and 15. This is your total tax . 16 17 Federal income tax withheld from Forms W-2 and 1099 17 400 X 18 Other payments and refundable credits: a Earned income credit (EIC).. 18a you have a nalifying child, tach Sch. EIC. you have ntaxable mbat pay, see structions. b Additional child tax credit. Attach Schedule 8812 ... 18b c American opportunity credit from Form 8863, line 8 . 18c d Schedule 3, line 14 . 18d e Add lines 18a through 18d. These are your total other payments and refundable credits. 18e credits ... 18e 19 Add lines 17 and 18e. These are your total payments . 19 ni Fund 20 If line 19 is more than line 16, subtract line 16 from line 19. This is the amount you overpaid. 20 21a Amount of line 20 you want refunded to you. If Form 8888 is attached, check here 21a deposit? b Routing number c Type: o Checking o Savings structions. d Account number 22 Amount of line 20 you want applied to your 2020 estimated 1 Wages, salaries, tips, etc. Attach Form(s) W-2 1 101,000 b Taxable interest. Attach Sch. B 2a Tax-exempt interest . 2a 1,000 if required 2b 1,500 b 3a Qualified dividends. Ordinary dividends. Attach Sch. B if required For- 3b 4a IRA distributions 4a b Taxable amount 4b ling y Pensions and annuities 4c d Taxable amount. 4d 5a Social security benefits 5a b Taxable amount 5b 7a Other income from Schedule 1, line 9 7a 600 b Add lines 1, 2b, 3b, 46, 40, 5b, 6, and 7a. This is your total income 7b 103,100 8a Adjustments to income from Schedule 1, line 22 ... 8 5,000 dow(er), 4,400 ad of usehold, 8,350 you checked y box under andard duction, see structions. b Subtract line 8a from line 7b. This is your adjusted gross income 8b 98,100 9 Standard deduction or itemized deductions (from Schedule A) 9 24,400 10 Qualified business income deduction. Attach Form 8995 or Form 8995-A.... 10 11a Add lines 9 and 10. 11a 24,400 b Taxable income. Subtract line 11a from line 8b. If zero or less, enter -o-, 11b 73,700 r Disclosure, Privacy Act, and Paperwork Reduction Act Notice, see separate instructions. Form 1040 (2019) 40 (2019) Lance H. and Wanda B. Dean 123-45-6786 Page 2 12a Tax (see inst.) Check if any from Form(s): 1 0 8814 2 O 4972 30 12a 8,844 X b Add Schedule 2, line 3, and line 12a and enter the total 12b 13a Child tax credit or credit for other dependents . 0 13a For Disclosure, Privacy Act, and Paperwork Reduction Act Notice, see separate instructions. Form 1040 (2019) 1040 (2019) Lance H. and Wanda B. Dean 123-45-6786 Page 2 12a Tax (see inst.) Check if any from Form(s): 1 0 8814 2 0 4972 30 12a 8,844 X b Add Schedule 2, line 3, and line 12a and enter the total 12b 13a Child tax credit or credit for other dependents . 13a 0 b Add Schedule 3, line 7, and line 13a and enter the total 13b 14 Subtract line 13b from line 12b. If zero or less, enter -0- 14 0 15 Other taxes, including self-employment tax, from Schedule 2, line 10 .. 15 16 Add lines 14 and 15. This is your total tax . 16 17 Federal income tax withheld from Forms W-2 and 1099 17 400 X 18 Other payments and refundable credits: a Earned income credit (EIC).. 18a you have a nalifying child, tach Sch. EIC. you have ntaxable mbat pay, see structions. b Additional child tax credit. Attach Schedule 8812 ... 18b c American opportunity credit from Form 8863, line 8 . 18c d Schedule 3, line 14 . 18d e Add lines 18a through 18d. These are your total other payments and refundable credits. 18e credits ... 18e 19 Add lines 17 and 18e. These are your total payments . 19 ni Fund 20 If line 19 is more than line 16, subtract line 16 from line 19. This is the amount you overpaid. 20 21a Amount of line 20 you want refunded to you. If Form 8888 is attached, check here 21a deposit? b Routing number c Type: o Checking o Savings structions. d Account number 22 Amount of line 20 you want applied to your 2020 estimated 1 Wages, salaries, tips, etc. Attach Form(s) W-2 1 101,000 b Taxable interest. Attach Sch. B 2a Tax-exempt interest . 2a 1,000 if required 2b 1,500 b 3a Qualified dividends. Ordinary dividends. Attach Sch. B if required For- 3b 4a IRA distributions 4a b Taxable amount 4b ling y Pensions and annuities 4c d Taxable amount. 4d 5a Social security benefits 5a b Taxable amount 5b 7a Other income from Schedule 1, line 9 7a 600 b Add lines 1, 2b, 3b, 46, 40, 5b, 6, and 7a. This is your total income 7b 103,100 8a Adjustments to income from Schedule 1, line 22 ... 8 5,000 dow(er), 4,400 ad of usehold, 8,350 you checked y box under andard duction, see structions. b Subtract line 8a from line 7b. This is your adjusted gross income 8b 98,100 9 Standard deduction or itemized deductions (from Schedule A) 9 24,400 10 Qualified business income deduction. Attach Form 8995 or Form 8995-A.... 10 11a Add lines 9 and 10. 11a 24,400 b Taxable income. Subtract line 11a from line 8b. If zero or less, enter -o-, 11b 73,700 r Disclosure, Privacy Act, and Paperwork Reduction Act Notice, see separate instructions. Form 1040 (2019) 40 (2019) Lance H. and Wanda B. Dean 123-45-6786 Page 2 12a Tax (see inst.) Check if any from Form(s): 1 0 8814 2 O 4972 30 12a 8,844 X b Add Schedule 2, line 3, and line 12a and enter the total 12b 13a Child tax credit or credit for other dependents . 0 13a