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, and 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- 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 2017) 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. Because 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 4,200 7,800 from wages during 2018) Interest on home mortgage (First National Bank) Charitable contributions 6,000 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 Lance several years ago and designates Wanda 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 12/16/1976 Wanda Dean (age 40) 123-45-6787 08/08/1978 Penny Allen (age 19) 123-45-6788 10/09/1999 Kyle Allen (age 17) 123-45-6780 05/03/2002 Wayne Boyle (age 75) 123-45-6785 06/15/1943 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 December 20, 2017. For the past few years, Wayne qualified as a dependent of the Deans. Federal income tax withheld is $4,200 (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 completing the appropriate forms. Use Form 1040 and Schedule 1 to complete this tax return. 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 umbers. 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. . Form 1040 Complete Form 1040 below for Lance and Wanda Dean. Form Department of the Treasury-Internal Revenue Service (99) 1040 U.S. Individual Income Tax Return 2018 OMB No. 1545-0074 IRS Use Only Filing status: Married filing jointly Your first name and initial Last name Your social security number 123-45-6786 Lance H. Dean Your standard deduction: None Last name If joint return, spouse's first name and initial Wanda B. Dean Spouse's social security number 123-45-6787 Spouse standard deduction: Someone can claim your spouse as a dependent Spouse was born before January 2, 1954 Spouse is blind Spouse itemizes on a separate return or you were dual- status alien Yes Full-year health care coverage or exempt (see inst.) P.O. box, see instructions. Apt. no. Home address (number and street). If you have 431 Yucca Drive Presidential Election Campaign (see inst.) None City, town or post office, state, and ZIP code. If you have a foreign address, attach Schedule 6. Santa Fe, NM 87501 If more than four dependents, see inst. and here Dependents (see instructions): (2) Social security number (3) Relationship to you (4) if qualifies for (see inst.): (1) First name Last name Child tax credit Credit for other dependents (1) First name Last name Child tax credit Credit for other dependents Penny Allen 123-45-6788 Child No Yes Kyle Allen 123-45-6780 Child Yes No Sign Here Under penalties of perjury, I declare that I have examined this return and accompanying schedules and statements, and to the best of my knowledge and belief, they are true, correct, and complete. Declaration of preparer (other than taxpayer) is based on all information of which preparer has any knowledge. Your signature Your occupation If the IRS sent you an Identity Manager Protection PIN, enter it here Date (see inst.) Joint return? See instructions. Keep a copy for your records. Spouse's signature. If a joint Date return, both must sign. Spouse's occupation Paralegal If the IRS sent you an Identity Protection PIN, enter it here (see inst.) Preparer's name PTIN Paid Firm's EIN Preparer's signature Self-Prepared Check if: 3rd Party Designe Preparer Use Only Firm's name Phone no. Self-employed Firm's address Form 1040 (2018) Lance H. and Wanda B. Dean 123-45-6786 Page 2 1 Wages, salaries, tips, etc. Attach Form(s) W-2. 1 2a Tax-exempt interest 2a b Taxable interest 2b Qualified dividends b Ordinary dividends 3b 4a IRAs, pensions, and annuities Attach Form(s) W- 2. Also attach Form(s) W-2G and 1099-R if tax was 4a b Taxable amount 4b 5a Social security benefits 5a b Taxable amount 5b withheld. 6 Total income. Add lines 1 through 5. Add any amount from Schedule 1, line 22 6 7 Adjusted gross income. If you have no adjustments to income, enter the amount from line 6; otherwise, subtract Schedule 1, line 36, from line 6. 7 Standard 8 Standard deduction or itemized deductions (from Schedule A). 8 9 Qualified business income deduction (see instructions). 9 . 10 Taxable income. Subtract lines 8 and 9 from line 7. If zero or less, enter -0-... 10 Deduction for- Single or married filing separately, $12,000 Married filing jointly or Qualifying widow(er), $24,000 11 a Tax (see inst) (check if any from: 1 o Form(s) 8814 2 a Form 4972 3 o b Add any amount from Schedule 2 and check here 11 12 a Child tax credit/credit for other dependents b Add any amount from Schedule 3 and check here 12 Head of household, $18,000 If you checked any box under Standard 13 Subtract line 12 from line 11. If zero or less, enter -- 13 14 Other taxes. Attach Schedule 4 14 deduction, see instructions. 15 Total tax. Add lines 13 and 14 15 16 Federal income tax withheld from Forms W-2 and 1099. 16 17 Refundable credits: a EIC (see inst.). b Sch 8812 c Form 8863 Add any amount from Schedule 5 17 18 Add lines 16 and 17. These are your total payments 18 19 Refund If line 18 is more than line 15, subtract line 15 from line 18. This is the amount you overpaid 19 20a Amount of line 19 you want refunded to you. If Form 8888 is attached, check here.. 0 200 Direct deposit? b Routing number c Type: Checking Savings See instructions. d Account number 21 Amount of line 19 you want applied to your 2019 estimated tax .. 21