Note: This problem is for the 2019 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 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 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 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 1,200 Life insurance premiums (policy on Lance's life) 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) 123-45-6780 05/03/2003 Wayne Boyle (age 75) 123-45-6785 06/15/1944 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 December 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. . . 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 2019 OMB No. 1545-0074 IRS Use Only Filing Status Married filing jointly Your first name and middle initial Last name Your social security number 123-45-6786 Lance H. Dean Last name If joint return, spouse's first name and middle initial Wanda B. Dean Spouse's social security number 123-45-6787 Apt. no. Presidential Election Home address (number and street). If you have a P.O. box, see instructions. 431 Yucca Drive City, town or post office, state, and ZIP code. If you have a foreign address, also complete spaces below (see instructions). Santa Fe, NM 87501 Campaign Check here if you, or your spouse if filing jointly, want $3 to go to this fund. Checking a box below will not change your tax or refund. None Foreign country name Foreign province/state/county Foreign postal code If more than four dependents, see instructions and here Standard Someone can claim: None Deduction You: None Age/Blindness Spouse: None Dependents (see instructions): (2) Social security number (3) Relationship to you (4) if qualifies for (see instructions): (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 Wayne Boyle 123-45-6785 Parent No Yes 1 Wages, salaries, tips, etc. Attach Form(s) W-2 1 101,000 2a Tax-exempt interest. 2a 1,000 b Taxable interest. Attach Sch. B if required 2b 1,500 b 3a Qualified dividends ... 3a Ordinary dividends. Attach Sch. B if required 3b 4a IRA distributions ... 4a b Taxable amount. 4b Standard Deduction for- Single or Married filing separately, $12,200 Married filing jointly or Oualifvinn c Pensions and annuities 4c d Taxable amount. 4d 5a Social security benefits 5a b Taxable amount. 5b 6 Capital gain or (loss). Attach Schedule D if required. If not required, check here. 6 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 Qualifying widow(er), $24,400 Head of household, $18,350 If you checked any box under Standard Deduction, see instructions. 8a Adjustments to income from Schedule 1, line 22. 8a b Subtract line 8a from line 7b. This is your adjusted gross income 8b 9 Standard deduction or itemized deductions (from Schedule A) 9 5,000 x 10 Qualified business income deduction. Attach Form 8995 or Form 8995-A. 10 11a Add lines 9 and 10 11a b Taxable income. Subtract line 11a from line 8b. If zero or less, enter-O-.. 11b BAA For Disclosure, Privacy Act, and Paperwork Reduction Act Notice, see separate instructions. Form 1040 (2019) Form 1040 (2019) Lance H. and Wanda B. Dean 123-45-6786 Page 2 12a Tax (see inst.) Check if any from Form(s): 1 8814 2 0 4972 30 12a b Add Schedule 2, line 3, and line 12a and enter the total 12b 13a Child tax credit or credit for other dependents 13a 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-O- 14 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 18 Other payments and refundable credits: a Earned income credit (EIC)...... 18a If you have a qualifying child, attach Sch. EIC. If you have nontaxable combat pay, see instructions. b Additional child tax credit. Attach Schedule 8812 18b c American opportunity credit from Form 8863, line 8. 180 d Schedule 3, line 14 ..... 18d e Add lines 18a through 18d. These are your total other payments and refundable credits. 18e 19 Add lines 17 and 18e. These are your total payments. 19 8,300 X 20 Refund If line 19 is more than line 16, subtract line 16 from line 19. This is the amount overpaid. 20 114 X 21a Amount of line 20 you want refunded to you. If Form 8888 is attached, check here 21a 114 X Direct deposit? Routing number c Type: Checking Savings See instructions. Account number 22 Amount of line 20 you want applied to your 2020 estimated tax... 22 23 Amount Amount you owe. Subtract line 19 from line 16. For details on how to pay, see instructions 23 You Owe 24 Estimated tax penalty (see instructions) .. 24 Third Party Do you want to allow another person (other than your paid preparer) to discuss this return with Yes. Complete below. the IRS? See instructions. No Designee (Other than paid preparer) Designee's name Phone no. Personal identification number (PIN) 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 Date Your occupation If the IRS sent you an Identity Protection PIN, enter it here Joint return? See (see inst.) Manager instructions. Keep a copy for your records. Spouse's occupation Spouse's signature. If a joint Date return, both must sign. If the IRS sent your spouse an Identity Protection PIN, enter it here (see inst.) Paralegal Phone no. Email address Sign 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. Here Your signature Date Your occupation If the IRS sent you an Identity Protection PIN, enter it here Joint return? See (see inst.) instructions. Manager Keep a copy for Spouse's occupation your records. Spouse's signature. If a joint Date return, both must sign. If the IRS sent your spouse an Identity Protection PIN, enter it here (see inst.) Paralegal Phone no. Email address Preparer's name Date Paid PTIN Check if: Preparer's signature Self-Prepared 3rd Party Designee Firm's name Phone no. Preparer Use Only Self-employed Firm's address Firm's EIN Go to www.irs.gov/Form1040 for instructions and the latest information. Form 1040 (2019) Complete Schedule 1 for Lance and Wanda Dean for 2019. SCHEDULE 1 OMB No. 1545-0074 Additional Income and Adjustments to Income (Form 1040 or 1040-SR) 2019 Attachment Department of the Treasury Internal Revenue Service Attach to Form 1040 or 1040-SR. Go to www.irs.gov/Form1040 for instructions and the latest information. Sequence No. 01 Name(s) shown on Form 1040 or 1040-SR Lance H. and Wanda B. Dean Your social security number 123-45-6786 At any time during 2019, did you receive, sell, send, exchange, or otherwise acquire any financial interest in any virtual currency? . o Yes x No Part I Additional Income 1 Taxable refunds, credits, or offsets of state and local income taxes 1 2a Alimony received 2a b Date of original divorce or separation agreement (see instructions) 3 Business income or (loss). Attach Schedule C. 3 4 Other gains or (losses). Attach Form 4797 . 4 5 Rental real estate, royalties, partnerships, S corporations, trusts, etc. Attach Schedule E 5 6 Farm income or loss). Attach Schedule F. 6 7 Unemployment compensation .... 7 8 Other income. List type and amount State Lottery Winnings 8 600 9 Combine lines 1 through 8. Enter here and on Form 1040 or 1040-SR, line 7a 9 600 Part II Adjustments to Income 10 10 Educator expenses ...... 11 Certain business expenses of reservists, performing artists, and fee-basis government officials. Attach Form 2106 .. 12 Health savings account deduction. Attach Form 8889 11 12 13 Moving expenses for members of the Armed Forces. Attach Form 3903 13 14 Deductible part of self-employment tax. Attach Schedule SE. 14 15 Self-employed SEP, SIMPLE, and qualified plans 15 16 Self-employed health insurance deduction 16 17 Penalty on early withdrawal of savings 17 18a Alimony paid 18a b Recipient's SSN c Date of original divorce or separation agreement (see instructions) 19 IRA deduction .. 19 20 Student loan interest deduction 20 21 Tuition and fees. Attach Form 8917 21 22 Add lines 10 through 21. These are your adjustments to income. Enter here and on Form 1040 or 1040-SR, line 8a ... 22 BAA For Paperwork Reduction Act Notice, see your tax return instructions. Schedule 1 (Form 1040 or 1040-SR) 2019 Note: This problem is for the 2019 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 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 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 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 1,200 Life insurance premiums (policy on Lance's life) 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) 123-45-6780 05/03/2003 Wayne Boyle (age 75) 123-45-6785 06/15/1944 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 December 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. . . 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 2019 OMB No. 1545-0074 IRS Use Only Filing Status Married filing jointly Your first name and middle initial Last name Your social security number 123-45-6786 Lance H. Dean Last name If joint return, spouse's first name and middle initial Wanda B. Dean Spouse's social security number 123-45-6787 Apt. no. Presidential Election Home address (number and street). If you have a P.O. box, see instructions. 431 Yucca Drive City, town or post office, state, and ZIP code. If you have a foreign address, also complete spaces below (see instructions). Santa Fe, NM 87501 Campaign Check here if you, or your spouse if filing jointly, want $3 to go to this fund. Checking a box below will not change your tax or refund. None Foreign country name Foreign province/state/county Foreign postal code If more than four dependents, see instructions and here Standard Someone can claim: None Deduction You: None Age/Blindness Spouse: None Dependents (see instructions): (2) Social security number (3) Relationship to you (4) if qualifies for (see instructions): (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 Wayne Boyle 123-45-6785 Parent No Yes 1 Wages, salaries, tips, etc. Attach Form(s) W-2 1 101,000 2a Tax-exempt interest. 2a 1,000 b Taxable interest. Attach Sch. B if required 2b 1,500 b 3a Qualified dividends ... 3a Ordinary dividends. Attach Sch. B if required 3b 4a IRA distributions ... 4a b Taxable amount. 4b Standard Deduction for- Single or Married filing separately, $12,200 Married filing jointly or Oualifvinn c Pensions and annuities 4c d Taxable amount. 4d 5a Social security benefits 5a b Taxable amount. 5b 6 Capital gain or (loss). Attach Schedule D if required. If not required, check here. 6 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 Qualifying widow(er), $24,400 Head of household, $18,350 If you checked any box under Standard Deduction, see instructions. 8a Adjustments to income from Schedule 1, line 22. 8a b Subtract line 8a from line 7b. This is your adjusted gross income 8b 9 Standard deduction or itemized deductions (from Schedule A) 9 5,000 x 10 Qualified business income deduction. Attach Form 8995 or Form 8995-A. 10 11a Add lines 9 and 10 11a b Taxable income. Subtract line 11a from line 8b. If zero or less, enter-O-.. 11b BAA For Disclosure, Privacy Act, and Paperwork Reduction Act Notice, see separate instructions. Form 1040 (2019) Form 1040 (2019) Lance H. and Wanda B. Dean 123-45-6786 Page 2 12a Tax (see inst.) Check if any from Form(s): 1 8814 2 0 4972 30 12a b Add Schedule 2, line 3, and line 12a and enter the total 12b 13a Child tax credit or credit for other dependents 13a 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-O- 14 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 18 Other payments and refundable credits: a Earned income credit (EIC)...... 18a If you have a qualifying child, attach Sch. EIC. If you have nontaxable combat pay, see instructions. b Additional child tax credit. Attach Schedule 8812 18b c American opportunity credit from Form 8863, line 8. 180 d Schedule 3, line 14 ..... 18d e Add lines 18a through 18d. These are your total other payments and refundable credits. 18e 19 Add lines 17 and 18e. These are your total payments. 19 8,300 X 20 Refund If line 19 is more than line 16, subtract line 16 from line 19. This is the amount overpaid. 20 114 X 21a Amount of line 20 you want refunded to you. If Form 8888 is attached, check here 21a 114 X Direct deposit? Routing number c Type: Checking Savings See instructions. Account number 22 Amount of line 20 you want applied to your 2020 estimated tax... 22 23 Amount Amount you owe. Subtract line 19 from line 16. For details on how to pay, see instructions 23 You Owe 24 Estimated tax penalty (see instructions) .. 24 Third Party Do you want to allow another person (other than your paid preparer) to discuss this return with Yes. Complete below. the IRS? See instructions. No Designee (Other than paid preparer) Designee's name Phone no. Personal identification number (PIN) 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 Date Your occupation If the IRS sent you an Identity Protection PIN, enter it here Joint return? See (see inst.) Manager instructions. Keep a copy for your records. Spouse's occupation Spouse's signature. If a joint Date return, both must sign. If the IRS sent your spouse an Identity Protection PIN, enter it here (see inst.) Paralegal Phone no. Email address Sign 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. Here Your signature Date Your occupation If the IRS sent you an Identity Protection PIN, enter it here Joint return? See (see inst.) instructions. Manager Keep a copy for Spouse's occupation your records. Spouse's signature. If a joint Date return, both must sign. If the IRS sent your spouse an Identity Protection PIN, enter it here (see inst.) Paralegal Phone no. Email address Preparer's name Date Paid PTIN Check if: Preparer's signature Self-Prepared 3rd Party Designee Firm's name Phone no. Preparer Use Only Self-employed Firm's address Firm's EIN Go to www.irs.gov/Form1040 for instructions and the latest information. Form 1040 (2019) Complete Schedule 1 for Lance and Wanda Dean for 2019. SCHEDULE 1 OMB No. 1545-0074 Additional Income and Adjustments to Income (Form 1040 or 1040-SR) 2019 Attachment Department of the Treasury Internal Revenue Service Attach to Form 1040 or 1040-SR. Go to www.irs.gov/Form1040 for instructions and the latest information. Sequence No. 01 Name(s) shown on Form 1040 or 1040-SR Lance H. and Wanda B. Dean Your social security number 123-45-6786 At any time during 2019, did you receive, sell, send, exchange, or otherwise acquire any financial interest in any virtual currency? . o Yes x No Part I Additional Income 1 Taxable refunds, credits, or offsets of state and local income taxes 1 2a Alimony received 2a b Date of original divorce or separation agreement (see instructions) 3 Business income or (loss). Attach Schedule C. 3 4 Other gains or (losses). Attach Form 4797 . 4 5 Rental real estate, royalties, partnerships, S corporations, trusts, etc. Attach Schedule E 5 6 Farm income or loss). Attach Schedule F. 6 7 Unemployment compensation .... 7 8 Other income. List type and amount State Lottery Winnings 8 600 9 Combine lines 1 through 8. Enter here and on Form 1040 or 1040-SR, line 7a 9 600 Part II Adjustments to Income 10 10 Educator expenses ...... 11 Certain business expenses of reservists, performing artists, and fee-basis government officials. Attach Form 2106 .. 12 Health savings account deduction. Attach Form 8889 11 12 13 Moving expenses for members of the Armed Forces. Attach Form 3903 13 14 Deductible part of self-employment tax. Attach Schedule SE. 14 15 Self-employed SEP, SIMPLE, and qualified plans 15 16 Self-employed health insurance deduction 16 17 Penalty on early withdrawal of savings 17 18a Alimony paid 18a b Recipient's SSN c Date of original divorce or separation agreement (see instructions) 19 IRA deduction .. 19 20 Student loan interest deduction 20 21 Tuition and fees. Attach Form 8917 21 22 Add lines 10 through 21. These are your adjustments to income. Enter here and on Form 1040 or 1040-SR, line 8a ... 22 BAA For Paperwork Reduction Act Notice, see your tax return instructions. Schedule 1 (Form 1040 or 1040-SR) 2019