Question

Jamie and Cecilia Reyes are husband and wife and file a joint return. They live at 5677 Apple Cove Road, Boise ID 83722. Jaime’s social security number is 412-34-5670 (date of birth 6/15/1969) and Cecilia’s is 412-34-5671 (date of birth 4/12/1971). They provide more than half of the support of their daughter, Carmen (age 23). Social security number 412-34-5672. (date of birth 9/1/1995), who is a full-time veterinarian school student. Carmen received a $3,200 scholarship covering her room and board at college. She was not required to perform any services to receive the scholarship. Jaime and Cecilia furnish all of the support of Maria (Jamie’s grandmother), Social Security number 412-34-5673 (date of birth 11/6/1948), who is age 70 and lives in a nursing home. They also have a son, Gustavo (age 4), social security number 412-34-5674 (date of birth 3/14/2014). The Reyes and all of their dependents had qualifying health care coverage at all time during the tax year.

Jaime’s W-2 contained the following information:

Federal Wages (box 1) = $145,625.00

Federal W/H (box 2) = $ 16,112.25

Social Security wages (box 3) = $128,400.00

Social Security W/H (box 4) = $7,960.80

Medicare Wages (box 5) = $145,625.00

Medicare W/H (box 6) = $2,111.56

State Wages (box 16) = $145,625.00

State W/H (box 17) = $5.435.00

Other receipts for the couple were as follows:

Dividends (all qualified dividends) $2,500

Interest Income:

Union Bank $ 220

State of Idaho – Interest on tax refund $22

City of Boise School bonds $1,250

Interest from U.S savings bonds $410 (not used for educational purposes)

2017 federal income tax refund received in 2018 $2,007

2017 state income tax refund received in 2018 $218

Idaho lottery winnings $1,100

Casino slot machine winnings $2,250

Gambling losses at casino $6,500

Other information that the Reyeses provided for the 2018 tax year:

Mortgage interest on personal residence $11,081

Loan interest on fully equipped motor home $3,010

Doctor’s fee for a face lift for Mr. Reyes $8,800

Dentist’s fee for a new dental bridge for Mr. Reyes $3,500

Vitamins for the entire family $110

Real estate property taxes paid $5,025

DMV fees on motor home (tax portion) $1,044

DMV fees on family autos (tax portion) $436

Doctor’s bills for grandmother $2,960

Nursing Home for grandmother $10,200

Wheelchair for grandmother $1,030

Property Taxes on boat $134

Interest on personal credit card $550

Interest on loan to buy public school district bonds $270

Cash contributions to church (all contributions)    $6,100

Were in cash and none more than $250 at any one time)

Cash contribution to man at bottom of freeway off-ramp    $25

Contribution of furniture to Goodwill -cost basis    $4,000

Contribution of same furniture to listed above Goodwill -Fair market Value $410

Tax Return preparation fee for 2017 taxes $625

Required

Prepare a Form 1040 and appropriates schedules, Schedule A and Schedule B for the completion of the Reyes’s tax return. They do not want to contribute to the Presidential election campaign and do not want anyone to be a third-party designee. For any missing information, make reasonable assumptions. They had qualifying health coverage at all times during the year.

Answer 1

FORM 1040-Schedule A

Itemized Deductions:

Unreimbursed Medical and Dental Expenses:173306.56(8800+3500+110+2960+10200+145625+2111.56)

Interest Expenses14091:(11081+3010)

Taxes Paid:5784(5025+134+625)

Charitable Donations:6125(6100+25)

Casualty and Theft Losses:Nil

Unreimbursed Job-Related Expenses:Nil

Other certain Miscellaneous Deductions:6500

Schedule B:

Dividends:2500

Interest from a seller-financed mortgage and the buyer used the property as a personal residence:Nil

Interest from a bond:1930(1250+410+270)