Question

John Williams (birthdate August 2, 1974) is a single taxpayer, and he lives at 1324 Forest Dr., Reno, NV 89501. His Social Security number is 555-94-9358. John's earnings and withholdings as the manager of a local casino for 2016 are reported on his Form W-2:

a Employee's social security number 555-94-9358

OMB No. 1545-0008

Safe, accurate, FAST! Use

IRS e ~ file

Visit the IRS website at www.irs.gov/efile

b

Employer identification number (EIN)
31-1459656

1

Wages, tips, other compensation
194,000.00

2

Federal income tax withheld
32,000.00

c

Employer's name, address, and ZIP code
Lucky Ace Casino
700 N. Sierra Street
Reno, NV 89503

3

Social security wages
118,500.00

4

Social security tax withheld
7,347.00

5

Medicare wages and tips
194,000.00

6

Medicare tax withheld
2,813.00

7

Social security tips

8

Allocated tips

d

Control number

9

10

Dependent care benefits

e

Employee's first name and initial
John Williams
1324 Forest Drive
Reno, NV 89501

Last name

Suff.

11

Nonqualified plans

12a

See instructions for box 12

C o d e

13

Statutory employee	Retirement plan	Third-party sick pay
?	?	?

12b

C
o
d
e

14

Other

12c

C
o
d
e

12d

C
o
d
e

f

Employee's address and ZIP code

15State NV		Employer's state ID number	16	State wages, tips, etc.	17	State income tax	18	Local wages, tips, etc.	19	Local income tax	20	Locality name

Form W-2

Wage and Tax
Statement

2016

Department of the Treasury—Internal Revenue Service

Copy B–To Be Filed With Employee's FEDERAL Tax Return.

This information is being furnished to the Internal Revenue Service.

John's other income includes interest on a savings account at Nevada National Bank of $13,575.

John pays his ex-wife, Sarah McLoughlin, $4,000 per month. When their 12-year-old child (in the wife's custody) reaches 18, the payments are reduced to $2,750 per month. His ex-wife's Social Security number is 554-44-5555.

In 2016, John purchased a new car and so he kept track of his sales tax receipts during the year. His actual sales tax paid is $3,560, which exceeds the estimated amount per the IRS tables.

During the year, John paid the following amounts (all of which can be substantiated):

Credit card interest	$1,760
Auto loan interest	4,300
Auto insurance	900
Property taxes on personal residence	2,640
Blue Cross health insurance premiums	2,800
Other medical expenses	790
Income tax preparation fee	900
Charitable contributions:
Boy Scouts	1,350
St. Matthews Church	3,100
U. of Nevada (Reno) Medical School	26,900
Nevada Democratic Party	250
Fund-raising dinner for the Reno Auto Museum	100
(value of dinner is $25)

John also received the following Form 1098:

? CORRECTED (if checked)

RECIPIENT'S/LENDER'S name, street address, city or town, state or province, country, ZIP or foreign postal code, and telephone no.

Reno Bank & Trust
49 Commerce Street
Reno, NV 89501

*Caution: The amount shown may not be fully deductible by you. Limits based on the loan amount and the cost and value of the secured property may apply. Also, you may only deduct interest to the extent it was incurred by you, actually paid by you, and not reimbursed by another person.

OMB No. 1545-0901
2016
(Rev. July 2016)

Form 1098

Mortgage
Interest
Statement

1 Mortgage interest received from payer(s)/borrower(s)*
$ 18,900.00

Copy B
For Payer/Borrower

The information in boxes 1 through 9 is important tax information and is being furnished to the Internal Revenue Service. If you are required to file a return, a negligence penalty or other sanction may be imposed on you if the IRS determines that an underpayment of tax results because you overstated a deduction for this mortgage interest or for these points, reported in boxes 1 and 6; or because you didn't report the refund of interest (box 4); or because you claimed a non-deductible item.

RECIPIENT'S/LENDER'S federal identification number

33-1234569

PAYER'S/BORROWER'S taxpayer identification no.

555-94-9358

2 Outstanding mortgage principal as of 1/1/2016
$594,400.00

3 Mortgage origination date

03/01/2001

4 Refund of overpaid interest
$

5 Mortgage insurance premiums
$

PAYER'S/BORROWER'S name

John Williams

6 Points paid on purchase of principal residence
$

Street address (including apt. no.)

1324 Forest Drive

7 Is address of property securing mortgage same as PAYER'S/BORROWER'S address?
If Yes, box is checked	?
If No, see box 8 or 9, below

City or town, state or province, country, and ZIP or foreign postal code

Reno, NV 89501

10 Other

8 Address of property securing mortgage

Account number (see instructions)

9 If property securing mortgage has no address, below is the description of the property

Form 1098

(keep for your records)

www.irs.gov/form1098

Department of the Treasury - Internal Revenue Service

Answer 1

Form 1040

Tax applicable for taxable income of $114,000 from 1040 instructions is $114,000 * 28% - 6963.25 = 24957

Payment that is contingent upon the status of the child is not alimony. Thus, only $2,750 is considered alimony. For the year, it will be $33,000.

Schedule A

auto loan interest, credit card interest, auto insurance are personal expenses in nature and are not allowed. Law specifically disallows contributions to political party. Fund raising dinner expenses reduces by the value of dinner benefit received by the taxpayer.