THIS IS A U.S. TAX ACCOUNTING QUESTION FOR SURVEY & TAX ACCOUNTING COURSE!!!....

Your clients, David and Charlene Thomas, (David is 55 and Charlene is 45) have hired you to complete their 2015 tax return (2015 tax year). They wish to pay the minimum amount of taxes possible in this tax year. Disregard AMT; BUT DO CONSIDER ALL OTHER available credits). Assume they have provided you with copies of all the following information. They reside in Austin, Texas at 555 Lookout Dr., zip 78725. Their SS numbers are 111-11-1111 and 222-22-2222 respectively. They provide the majority of the support and home for their two adopted children: Austin is a full-time student, son (age 10) and their daughter is Stephanie (age 19) graduated in May 2014 but has not been able to find/keep a full-time job. She earned a total of $4,500 in 2015 as a part-time office clerk and spent approximately 4 months visiting a friend in California. Their SS numbers are: 555-55-5555 and 333-33-3333, respectively. (All ages as of Dec 31, 2015) Charlenes mother, Hattie Hunter (age 76, widowed) lives near Charlene and David in her own apartment which Charlene pays for (approx $15,000 per year including utilities). Her SS number is 666-66-6666. Except for $8,000 which Hattie received in Jan 2015 as an inheritance from her half-brothers estate, she has no other source of income (assume she is a Canadian citizen does NOT qualify for social security/medicare). Hattie spent $3,000 of her inherited money on her own education during 2015. Originally only 6 hours short of a degree, Hallie just finished her bachelors degree at a state university in Dec 2015, and hopes to dedicate the rest of her life as a volunteer at a local childrens home. Assume the taxpayers paid over half of Hatties total support. Charlene is a cash basis, self-employed photographer with currently only two major commercial clients. She received two 1099-Misc forms: for $27,000 and $18,000 for photo shoots in 2015. She also received a payment of $18,000 in Feb. 2015 from a former client for a photo package sold in late Dec. 2014. She did not receive a Form 1099 for this amount. *Charlenes first husband (Martin King) died 8 years ago of cancer and she inherited a lump sum of $200,000 in life insurance proceeds which she invested in mutual stock funds and an interest-bearing cash account at Edward Jones see below. She draws money from the account throughout the year to buy things for her family. David in a senior site manager for a young, growing construction firm. He received a W-2 for gross wages of $75,000; Fed Tax W/H of $10,000; ASSUME ALL FICA AMOUNTS WITHHELD AT THE CORRECT AMOUNT. His firm (which is struggling due to the economy) does NOT reimburse him for any out of pocket expenses that he may incur. Addition information (no foreign accounts during the tax year) Interest Income: Bank of America Form 1099-Int $1,800 Frost Bank Form 1099-Int 150 Edward Jones Money Market (Cash Account) Form 1099-Int 350 Interest from US Series EE savings bonds (purchased in 1985) that were cashed in 2015 (proceeds used for Austins educational expenses) 150 Dividend Income: Charlenes American Mutual Funds Account At Edward Jones Form 1099-Div $7,000 ordinary; of which $1,000 is qualified Stock Transactions: ASSUME IRS NOTIFICATION WAS PROVIDED BY BROKER Dell, 15 shares sold, net sales proceeds from broker $2,500; date sold 03/1/2015, Basis $ 75 per share, date purchased 10/3/2011 Clear Channel, 80 shares sold, net sales proceeds from broker $1,000; Date sold 4/1/2015, Basis $125 per share, date purchased 12/10/2009 Charlene uses her own name as the name of her company. She uses her SS number in lieu of an ENI. Charlene works out of her home but does not have a specific office in the house as she typically does her office related work in the den or living room. She uses a business use only computer system that is fully depreciated. She incurred the following business related expenses during the year: Printing/copying $3,000 Legal & Agent fees $1,125 Office Supplies $2,750 Internet Service used 100% for her work $1,200 (this is the total Time Warner service bill) Postage/UPS $300 Premium for Insurance Policy (100% Business) $75 Medical Expenses (unreimbursed portions) Premiums for health insurance for the family $12,800 (this is the portion husband had to pay) (medical plan is through husbands job) Medicine and drugs (prescription) 3,500 Eyeglasses (for three members of the family) 1,500 Mileage to & from a medical clinic in Houston 475 miles (on Dec 11, 2015) Other Unreimbursed qualified medical expenses paid by the taxpayer all relating to doctor care and a hospital stay when Hallie fell and broke several bones, etc. $18,000 Interest Home Mortgage paid on Austin home 10,200 (paid to Country Wide) Home Mortgage paid on weekend house 7,150 (paid to Regional Finance) Business Use Credit Card (100%) used by Charlene 500 Taxes Real Estate Taxes - Austin home 8,800 Real Estate Taxes weekend home 1,200 Contributions (you have verified all dates as correct) All cash and clients have all required receipts and required documentation. (all are IRS recognized non-profit organizations) United Way of Austin 225 (paid by credit card on 12/31/15) Salvation Army 175 (check dated in 6/20/15) American Heart Association 500 (check dated and mailed on 12/31/15; received thank you note is dated 1/12/16) First Baptist Church 5,200 (paid by check dated 10/11/15) Other/Miscellaneous Income Tax preparation fee $850 (paid in May 2015 for 2014 return; this is full amount: assume 50% is related to Charlenes Sch C) Safe deposit box used 100% for storage of Hallies mementos $125 Davids Engineers Society dues and State license $1,150 Davids unreimbursed work related office supplies 3,175 Davids airfare to a one-day business meeting in New Orleans 850 (no advance purchase, RT same day) Interest paid on Davids student loan (got his masters in 2014) 800 David lost gross $300 in a poker game; winnings = 0; he has documentation. Child care Expenses Paid for (son) Austin: Five Star After-School Care, Austin, TX ID# 05-3434567 (two days a week) $7,850 Educational Expenses paid during tax year Austin attends public school. Estimated Taxes Paid (on time) Paid $4,000 for each of the four quarters; total of $16,000. If applicable, client would like any over-payment to be applied to 2016. APLLY ALL APPLICABLE TAX CREDITS. DISREGARD AMT.