Please Answer Questions in the 2018 1040 Form and Schedule A/1

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 recorded the following receipts. Salaries ($60,000 for Lance, $46,000 for Wanda) $106,000 Interest income- City of Albuquerque general purpose bonds $1000 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 36,000 Settlement from Roadrunner Touring Company 90,000 Lottery winnings 600 Federal income tax refund (for tax year 2017) 400 Wanda previously married to John Allen. When they divorced in 2018, 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 to her $90,000 cash in settlement of the personal injuries she sustained. The Deans made the following 2018 expenditures. Medical expenses (not covered by insurance) $8,200 Taxes- Property taxes on personal residence $3600 State of New Mexico income tax (includes amount withheld from wages during 2018) 4,200 7,800 Interest on home mortgage 6,000 Gifts to charity 4,600 Life insurance premiums (policy on Lance's life) 1,200 Contribution to traditional IRA (on Wanda's behalf) 5,000 Traffic fines Contribution to the reelection campaign fund of the mayor of Santa Fe 500 Funeral expenses for Wayne Boyle 7,300 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 Dean 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 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 Dean household includes the following, for whom they provide more than half of the support. Social Security Number Birth Date Lance Dean (age 42) Wanda Dean (age 40) Penny Allen (age 19) Kyle Allen (age 17) 123-45-6786 123-45-6787 123-45-6788 123-45-6780 12/16/1976 08/08/1978 10/09/1999 05/03/2002 Wayne Dean (age 75) 123-45-6785 06/15/1943 Penny graduated from high school on May 9, 2018, and is undecided about college. This year, she earned $8,500 (placed in a savings account) playing a harp in the lobby of a local hotel. Wayne is Lance'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. All members of the family were covered by health insurance for all of 2018. Required: Determine the 2018 Federal income tax 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. 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. en computing the text fie nearest 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 recorded the following receipts. Salaries ($60,000 for Lance, $46,000 for Wanda) $106,000 Interest income- City of Albuquerque general purpose bonds $1000 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 36,000 Settlement from Roadrunner Touring Company 90,000 Lottery winnings 600 Federal income tax refund (for tax year 2017) 400 Wanda previously married to John Allen. When they divorced in 2018, 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 to her $90,000 cash in settlement of the personal injuries she sustained. The Deans made the following 2018 expenditures. Medical expenses (not covered by insurance) $8,200 Taxes- Property taxes on personal residence $3600 State of New Mexico income tax (includes amount withheld from wages during 2018) 4,200 7,800 Interest on home mortgage 6,000 Gifts to charity 4,600 Life insurance premiums (policy on Lance's life) 1,200 Contribution to traditional IRA (on Wanda's behalf) 5,000 Traffic fines Contribution to the reelection campaign fund of the mayor of Santa Fe 500 Funeral expenses for Wayne Boyle 7,300 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 Dean 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 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 Dean household includes the following, for whom they provide more than half of the support. Social Security Number Birth Date Lance Dean (age 42) Wanda Dean (age 40) Penny Allen (age 19) Kyle Allen (age 17) 123-45-6786 123-45-6787 123-45-6788 123-45-6780 12/16/1976 08/08/1978 10/09/1999 05/03/2002 Wayne Dean (age 75) 123-45-6785 06/15/1943 Penny graduated from high school on May 9, 2018, and is undecided about college. This year, she earned $8,500 (placed in a savings account) playing a harp in the lobby of a local hotel. Wayne is Lance'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. All members of the family were covered by health insurance for all of 2018. Required: Determine the 2018 Federal income tax 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. 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. en computing the text fie nearest