Note: This problem is for the 2018 tax year 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 2018, the Deans had the following receipts: Salaries ($60,000 for Lance, $41,000 for Wanda) $101,000 Interest income- $1,000 1,100 400 City of Albuquerque 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 2017) 2,500 7,200 26,000 90,000 600 400 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 2018 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 2018) 7,800 6,000 3,600 1,200 5,000 300 500 6,300 4,200 Interest on home mortgage (First National Bank) Charitable contributions Life insurance premiums (policy on Lance's life) Contribution to traditional IRA (on Wanda's behalf) Traffic fines Contribution to the reelection campaign fund of the mayor of Santa Fe Funeral expenses for Wayne Boyle 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: The Deans' household includes the following, for whom they provide more than half of the support: Social Security Number Birth Date 12/16/1976 08/08/1978 10/09/1999 05/03/2002 06/15/1943 123-45-6786 123-45-6787 123-45-6788 123-45-6789 123-45-6785 Lance Dean (age 42) Wanda Dean (age 40) Penny Allen (age 19) Kyle Allen (age 16) Wayne Boyle (age 75) Penny graduated from high school on May 9, 2018, and is undecided about college. During 2018, 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, 2018. For the past few years, Wayne qualified as a dependent of the Deans Federal income tax withheld is $5,200 (Lance) and $2,100 (Wanda). The proper amount of Social Security and Medicare tax was withheld. Required: Determine the Federal income tax for 2018 for the Deans on a joint return by providing the following information that would appear on Form 1040 and Schedule A. They do not want to contribute to the Presidential Election Campaign Fund. All members of the family had health care coverage for all of 2018. 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". When computing the tax liability, do not round your immediate calculations. If required round your final answers to the nearest dollar. Provide the following that would be reported on Lance and Wanda Dean's Schedule A 1. Calculate the deduction allowed for medical expenses. 2. Calculate the deduction for taxes. 3. Calculate the deduction for interest. 4. Calculate the charitable contribution deduction allowed. 5. Calculate total itemized deductions