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 2020, the Deans had the following receipts:
| Salaries ($60,000 for Lance, $42,000 for Wanda) | | | | $102,000 |
| 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 2019) | | | | 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 2020:
| 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 2020) | | 4,200 | | 7,800 |
| Interest on home mortgage (First National Bank) | | | | 6,000 |
| Charitable contributions (cash) | | | | 3,600 |
| Life insurance premiums (policy on Lance's life) | | | | 1,200 |
| Contribution to traditional IRA (on Wanda's behalf) | | | | 6,000 |
| 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 | 12/16/1978 |
| Wanda Dean (age 40) | 123-45-6787 | 08/08/1980 |
| Penny Allen (age 19) | 123-45-6788 | 10/09/2001 |
| Kyle Allen (age 16) | 123-45-6789 | 05/03/2004 |
| Wayne Boyle (age 75) | 123-45-6785 | 06/15/1945 |
*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, 2020, and is undecided about college. During 2020, 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, 2020. 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. The Deans received the appropriate coronavirus recovery rebates (economic impact payments); related questions in ProConnect Tax should be ignored.
Please help me correct the 1040
Thank you in advance!!!!
2020 Tax Rate Schedules Single-Schedule X Head of household-Schedule Z of the of the If taxable income is: Over- But not amount If taxable income is: Over- But not amount over- The tax is: over- over- The tax is: over- $ 0 $ 9,875 ...... 10% $ 0 $ 0 $ 14,100 ...... 10% $ 0 9,875 40,125 $ 987.50 + 12% 9,875 14,100 53,700 $ 1,410.00 + 12% 14,100 40,125 85,525 4,617.50 + 22% 40,125 53,700 85,500 6,162.00 + 22% 53,700 85,525 163,300 14,605.50 + 24% 85,525 85,500 163,300 13,158.00 + 24% 85,500 163,300 207,350 33,271.50 + 32% 163,300 163,300 207,350 31,830.00 + 32% 163,300 207,350 518,400 47,367.50 + 35% 207,350 518,400 45,926.00 + 35% 207,350 207,350 518,400 518,400 156,235.00 + 37% 518,400 154,793.50 + 37% 518,400 Married filing jointly or Qualifying widow(er)-Schedule Y-1 Married filing separately-Schedule Y-2 Married filing jointly or Qualifying widow(er)-Schedule Y-1 Married filing separately-Schedule Y-2 of the amount If taxable income is: Over- $ 0 But not If taxable income is: Over- But not over- of the amount over- over- over- The tax is: The tax is: ... 10% $ 19,750 $ 0 $ 0 9,875 $ 9,875 40,125 .... 10% $ 987.50 + 12% 19,750 80,250 $ 1,975.00 + 12% 9,875 80,250 171,050 9,235.00 + 22% 40,125 85,525 4,617.50 + 22% 40,125 171,050 326,600 29,211.00 + 24% $ 0 19,750 80,250 171,050 326,600 414,700 622,050 85,525 163,300 14,605.50 + 24% 85,525 326,600 414,700 66,543.00 + 32% 207,350 33,271.50 + 32% 163,300 163,300 207,350 414,700 622,050 94,735.00 + 35% 311,025 47,367.50 + 35% 207,350 622,050 167,307.50 + 37% 311,025 83,653.75 + 37% 311,025 1 Wages, salaries, tips, etc. Attach Form(s) W-2 1 102,000 Attach 2a Tax-exempt interest .. 2a 1,000 b Taxable interest .. 2b 1,500 Sch. B if required. 3b 4b 3a Qualified dividends ... b Ordinary dividends. 4a IRA distributions .... 4a b Taxable amount .. 5a Pensions and annuities 5a b Taxable amount .. 6a Social security benefits b Taxable amount .. 7 Capital gain or loss). Attach Schedule D if required. If not required, check here .. 5b 6b O 7 7 8 Other income from Schedule 1, line 9... 8 600 9 Standard Deduction for- Single or Married filing separately, $12,400 Married filing jointly or Qualifying widow(er), $24,800 Head of Add lines 1, 2b, 3b, 4b, 5b, 6b, 7, and 8. This is your total income 9 104,100 10 Adjustments to income: a From Schedule 1, line 22 10a 6,000 b Charitable contributions if you take the standard deduction. 7600 10 Adjustments to income: a From Schedule 1, line 22. 10a 6,000 b Charitable contributions if you take the standard deduction. See instructions.. 10b 3,600 jointly or Qualifying widow(er), $24,800 Head of household, $18,650 If you checked any box under Standard Deduction, see instructions. c Add lines 10a and 10b. These are your total adjustments to income 10C 9,600 X 11 Subtract line 10c from line 9. This is your adjusted gross income 11 94,500 x 12 Standard deduction or itemized deductions (from Schedule A) 12 24,800 13 Qualified business income deduction. Attach Form 8995 or Form 8995-A 13 14 Add lines 12 and 13. 14 24,800 15 Taxable income. Subtract line 14 from line 11. If zero or less, enter-0-.. 15 69,700 x BAA For Disclosure, Privacy Act, and Paperwork Reduction Act Notice, see separate instructions. Form 1040 (2020) Form 1040 (2020) Lance H. Dean 123-45-6786 Page 2 16 Tax (see instructions). Check if any from Form(s): 1 8814 2 0 4972 30 16 7,800 x 17 Amount from Schedule 2, line 3. 17 18 Add lines 16 and 17... 18 7,800 x 19 Child tax credit or credit for other dependents. 19 20 Amount from Schedule 3, line 7 20 21 Add lines 19 and 20 21 0 x 22 Subtract line 21 from line 18. If zero or less, enter-O- 22 9,560 X 23 Other taxes, including self-employment tax, from Schedule 2, line 10 23 24 Add lines 22 and 23. This is your total tax 24 9,560 X 25 Federal income tax withheld from: Form(s) W-2.. 5,700 d Add lines 25a through 250 250 5,700 26 2020 estimated tax payments and amount applied from 2019 return Earned income credit (EIC) 27 If you have a 26 qualifying child, attach Sch. EIC. 27 If you have nontaxable combat pay, see 28 instructions. Additional child tax credit. Attach Schedule 8812 28 American opportunity credit from Form 8863, line 8 29 29 Recovery rebate credit. See instructions 30 30 Amount from Schedule 3, line 13 31 31 32 Add lines 27 through 31. These are your total other payments and refundable credits 32 33 Add lines 25d, 26, and 32. These are your total payments 33 5,700 33 Add lines 25d, 26, and 32. These are your total payments 33 5,700 34 Refund If line 33 is more than line 24, subtract line 24 from line 33. This is the amount you overpaid ... 34 0 35a Amount of line 34 you want refunded to you. If Form 8888 is attached, check here 35a 0 x Direct deposit? Routing number 11111111 c Type: Checking Savings See instructions. d Account number 36 Amount of line 34 you want applied to your 2021 estimated tax..... 36 Amount 37 Subtract line 33 from line 24. This is the amount you owe now 37 You Owe Note: Schedule H and Schedule SE filers, line 37 may not represent all of the taxes you owe for 2020. See Schedule 3, line 12e, and its instructions for details. For details on how to pay, see 2020 Tax Rate Schedules Single-Schedule X Head of household-Schedule Z of the of the If taxable income is: Over- But not amount If taxable income is: Over- But not amount over- The tax is: over- over- The tax is: over- $ 0 $ 9,875 ...... 10% $ 0 $ 0 $ 14,100 ...... 10% $ 0 9,875 40,125 $ 987.50 + 12% 9,875 14,100 53,700 $ 1,410.00 + 12% 14,100 40,125 85,525 4,617.50 + 22% 40,125 53,700 85,500 6,162.00 + 22% 53,700 85,525 163,300 14,605.50 + 24% 85,525 85,500 163,300 13,158.00 + 24% 85,500 163,300 207,350 33,271.50 + 32% 163,300 163,300 207,350 31,830.00 + 32% 163,300 207,350 518,400 47,367.50 + 35% 207,350 518,400 45,926.00 + 35% 207,350 207,350 518,400 518,400 156,235.00 + 37% 518,400 154,793.50 + 37% 518,400 Married filing jointly or Qualifying widow(er)-Schedule Y-1 Married filing separately-Schedule Y-2 Married filing jointly or Qualifying widow(er)-Schedule Y-1 Married filing separately-Schedule Y-2 of the amount If taxable income is: Over- $ 0 But not If taxable income is: Over- But not over- of the amount over- over- over- The tax is: The tax is: ... 10% $ 19,750 $ 0 $ 0 9,875 $ 9,875 40,125 .... 10% $ 987.50 + 12% 19,750 80,250 $ 1,975.00 + 12% 9,875 80,250 171,050 9,235.00 + 22% 40,125 85,525 4,617.50 + 22% 40,125 171,050 326,600 29,211.00 + 24% $ 0 19,750 80,250 171,050 326,600 414,700 622,050 85,525 163,300 14,605.50 + 24% 85,525 326,600 414,700 66,543.00 + 32% 207,350 33,271.50 + 32% 163,300 163,300 207,350 414,700 622,050 94,735.00 + 35% 311,025 47,367.50 + 35% 207,350 622,050 167,307.50 + 37% 311,025 83,653.75 + 37% 311,025 1 Wages, salaries, tips, etc. Attach Form(s) W-2 1 102,000 Attach 2a Tax-exempt interest .. 2a 1,000 b Taxable interest .. 2b 1,500 Sch. B if required. 3b 4b 3a Qualified dividends ... b Ordinary dividends. 4a IRA distributions .... 4a b Taxable amount .. 5a Pensions and annuities 5a b Taxable amount .. 6a Social security benefits b Taxable amount .. 7 Capital gain or loss). Attach Schedule D if required. If not required, check here .. 5b 6b O 7 7 8 Other income from Schedule 1, line 9... 8 600 9 Standard Deduction for- Single or Married filing separately, $12,400 Married filing jointly or Qualifying widow(er), $24,800 Head of Add lines 1, 2b, 3b, 4b, 5b, 6b, 7, and 8. This is your total income 9 104,100 10 Adjustments to income: a From Schedule 1, line 22 10a 6,000 b Charitable contributions if you take the standard deduction. 7600 10 Adjustments to income: a From Schedule 1, line 22. 10a 6,000 b Charitable contributions if you take the standard deduction. See instructions.. 10b 3,600 jointly or Qualifying widow(er), $24,800 Head of household, $18,650 If you checked any box under Standard Deduction, see instructions. c Add lines 10a and 10b. These are your total adjustments to income 10C 9,600 X 11 Subtract line 10c from line 9. This is your adjusted gross income 11 94,500 x 12 Standard deduction or itemized deductions (from Schedule A) 12 24,800 13 Qualified business income deduction. Attach Form 8995 or Form 8995-A 13 14 Add lines 12 and 13. 14 24,800 15 Taxable income. Subtract line 14 from line 11. If zero or less, enter-0-.. 15 69,700 x BAA For Disclosure, Privacy Act, and Paperwork Reduction Act Notice, see separate instructions. Form 1040 (2020) Form 1040 (2020) Lance H. Dean 123-45-6786 Page 2 16 Tax (see instructions). Check if any from Form(s): 1 8814 2 0 4972 30 16 7,800 x 17 Amount from Schedule 2, line 3. 17 18 Add lines 16 and 17... 18 7,800 x 19 Child tax credit or credit for other dependents. 19 20 Amount from Schedule 3, line 7 20 21 Add lines 19 and 20 21 0 x 22 Subtract line 21 from line 18. If zero or less, enter-O- 22 9,560 X 23 Other taxes, including self-employment tax, from Schedule 2, line 10 23 24 Add lines 22 and 23. This is your total tax 24 9,560 X 25 Federal income tax withheld from: Form(s) W-2.. 5,700 d Add lines 25a through 250 250 5,700 26 2020 estimated tax payments and amount applied from 2019 return Earned income credit (EIC) 27 If you have a 26 qualifying child, attach Sch. EIC. 27 If you have nontaxable combat pay, see 28 instructions. Additional child tax credit. Attach Schedule 8812 28 American opportunity credit from Form 8863, line 8 29 29 Recovery rebate credit. See instructions 30 30 Amount from Schedule 3, line 13 31 31 32 Add lines 27 through 31. These are your total other payments and refundable credits 32 33 Add lines 25d, 26, and 32. These are your total payments 33 5,700 33 Add lines 25d, 26, and 32. These are your total payments 33 5,700 34 Refund If line 33 is more than line 24, subtract line 24 from line 33. This is the amount you overpaid ... 34 0 35a Amount of line 34 you want refunded to you. If Form 8888 is attached, check here 35a 0 x Direct deposit? Routing number 11111111 c Type: Checking Savings See instructions. d Account number 36 Amount of line 34 you want applied to your 2021 estimated tax..... 36 Amount 37 Subtract line 33 from line 24. This is the amount you owe now 37 You Owe Note: Schedule H and Schedule SE filers, line 37 may not represent all of the taxes you owe for 2020. See Schedule 3, line 12e, and its instructions for details. For details on how to pay, see
