Annie and Arnold Morris live at 123 North Sherman St., Placerville, CA 95667. They have one dependent child, Barbara, age 3, and Arnold’s parents Maggie and Mel Morris also live with them. Maggie’s income was $3,054 and Mel’s income was $3,066, and Annie and Arnold provided more than half the cost of their support.

The Morris’ federal adjusted gross income was $107,460. Included in that amount, are wages of $61,000 and $48,485, California income tax refund of $320, interest received on a U.S. Savings bond of $165, long-term capital gains of $2,090, and California lottery winnings of $400. The federal AGI does not include interest income on City of Sacramento bonds of $625. They also had an allowable IRA deduction of $5,000.   Previously, in 2018, the Morris family used itemized deductions and got full advantage from State Income Tax paid.

Their federal itemized deductions included $12,350 for home mortgage interest (the mortgage loan balance on their residence averaged $315,000), $6,200 for California income tax (W-2s 2019 withholding), $1,095 for State Disability Insurance (SDI), $3,890 real estate/property tax, $490 personal property tax on value of automobiles, and $2,620 in verifiable charitable cash contributions.   Federal Schedule A total allowable itemized deduction amount is $24,970.

See the copy of partial information on the Morris’ Federal Form 1040 and Schedule A.

The Social Security numbers are: Annie 111-22-3333 (Birthdate 2/1/1981); Arnold 003-04-2020 (Birthdate 1/1/1981); Barbara 333-44-5555 (Birthdate 3/1/2016); Maggie 444-55-6666 (Birthdate 4/1/1941); and Mel 555-66-7777 (Birthdate 5/1/1941).

Required:  

Complete the tax return on 2019 Form 540, and Schedule CA (540).