Tax Assignment

Mary and John Piccadilly have to file their 2019 federal tax and they have reached out to you to assist them in preparing their taxes. John graduated from Sac State eight years ago and now has a good paying job where he is making an annual income of $72,000. Mary works part-time and makes an annual income of $28,000. Having graduated with no student loans, John and Mary were able to purchase a home in 2017 in Fair Oaks. Their mortgage interest for 2019 was $16,500 and real estate tax was $1,850. Because Johns primary goal was to purchase a home, he decided not to participate in the retirement plan his employer offers. Marys employer does not offer a retirement plan. John and Mary donate $1,800 to their religious organization and other charities each year.

For 2019, Johns W-2 indicates that $7,500 was withheld in federal taxes and $1,850 in State taxes and Marys W-2 indicates that $2,950 was withheld in federal taxes and $550 in State taxes.

There are two parts to this assignment:

1. Students must complete 2019 Form 1040 and Schedule A using the information provided and fill out any other descriptive information needed including home address, social security numbers, signatures, tax preparers information and any other relevant information. The goal is to determine the total tax for John and Mary using the tax table in Form 1040 Instructions and then calculate whether they will get a refund or whether they owe money to the IRS. (25 points)
2. Answer the following two questions:
   1. What are the advantages and disadvantages of purchasing a home for tax purposes? (15 points)
   2. What advice would you give John and Mary about not participating in an employers retirement plan? (10 points)