Tax Return Problems Tax Forms Problem

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 2022, the Deans had the following receipts:

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 supportthe 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 2022:

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 employers 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:

Penny graduated from high school on May 9, 2022, and is undecided about college. During 2022, she earned $8,500 (placed in a savings account) playing a harp in the lobby of a local hotel. Wayne is Wandas widower father who died on December 20, 2022. For the past few years, Wayne qualified as a dependent of the Deans.

Federal income tax withheld is $3,900 (Lance) and $1,600 (Wanda). The proper amount of Social Security and Medicare tax was withheld.

Determine the Federal income tax for 2022 for the Deans on a joint return by completing the appropriate forms. They do not own and did not use any digital assets 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.

Salaries ( $60,000 for Lance, $42,500 for Wanda) $102,500 Interest income- City of Albuquerque general purpose bonds $1,000 Ford Motor company bonds 1,100 AllyBankcertificateofdeposit4007,2002,500 ChildsupportpaymentsfromJohnAllenAnnualgiftsfromparents7,20026,000 Settlement from Roadrunner Touring Company 90,000 Lottery winnings 600 Federal income tax refund (for tax year 2021) 400 \begin{tabular}{|l|c|c|} \hline & Social Security Number & Birth Date \\ \hline Lance Dean (age 42) & 123456786 & 12/16/1980 \\ \hline Wanda Dean (age 40) & 123456787 & 08/08/1982 \\ \hline Penny Allen (age 19) & 123456788 & 10/09/2003 \\ \hline Kyle Allen (age 16) & 123456780 & 05/03/2006 \\ \hline Wayne Boyle (age 75) & 123456785 & 06/15/1947 \\ \hline \end{tabular}