Question

Note: This problem is for the 2018 tax year. Lance H. and Wanda B. Dean are...

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 300
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
Penny Allen (age 19) 123-45-6788 10/09/1999
Kyle Allen (age 17) 123-45-6780 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 $8,50 (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.

Homework Answers

Answer #1

Wanda B. who married to John Allen previously now married to Lance H.

Wanda B. and John Allen had two offspring named Penny and Kyle. After separation the offspring will be Wanda B.

PARTICULARS AMOUNT
Salaries 106,000
Intrest 1550
Divident 950
Gifts(from parents) Excluded
STREET PAY
Running org. 90,000
lottrey(after tax) 420
IT Refund 400
TOTAL 199,320
Deductions:
Intrest on home loan 6,000
Gifts from church 4,600
Premiun on insurance 1,200
Funds toIRA 5,000
NET INCOME 182,520

NOTE:

Expenses has to deductes from tax payable.

Penny pay should  not be included with her folks pay.

INCOME:

Salaries =$106,000

Taxable intresst    =$2,500

Taxble refunds    =$400

rental lands and royalities =($6000)

Missillinious income = $99,100

TOTAL INCOME=$20,2000

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