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 2012, the Deans had the following receipts:
Salaries ($60,000 for Lance, $41,000 for Wanda)	$101,000
Interest income
City of Albuquerqe 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 2011)	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 2012:
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 2012)	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 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	12/16/1970
Wanda Dean (age 40)	123-45-6787	08/08/1972
Penny Allen (age 19)	123-45-6788	10/09/1993
Kyle Allen (age 17)	123-45-6789	05/03/1995
Wayne Boyle (age 75)	123-45-6785	06/15/1937
Penny graduated from high school on May 9, 2012, and is undecided about college.
During 2012, she earned $8,500 (placed in a savings account) playing a harp in the
lobby of a local hotel. Wayne is Wandas widower father who died on January 20, 2012.
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.
Determine the Federal income tax for 2012 for the Deans on a joint return. What's the AGI, Taxable Income and Net Balance?