Question

Jamie and Cecilia Reyes are husband and wife and file a joint return. They live at 5677 Apple Cove Road, Boise, ID 83722. Jamie’s social security number is 412-34-5670 (date of birth 6/15/1967) and Cecilia’s is 412-34-5671 (date of birth 4/12/1969). They provide more than half of the support of their daughter, Carmen (age 23), social security number 412-34-5672 (date of birth 9/1/1993), 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. Jamie and Cecilia furnish all of the support of Maria (Jamie’s grandmother), social security number 412-34-5673 (date of birth 11/6/1946), 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 3/14/2012). The Reyes and all of their dependents had qualifying health care coverage at all times during the tax year.

Jamie’s W-2 contained the following information:

Federal Wages (box 1) = $145,625.00

Federal W/H (box 2) = $ 16,812.50

Social Security wages (box 3) = $118,500.00

Social Security W/H (box 4) = $ 7,347.00

Medicare Wages (box 5) = $145,625.00

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

State Wages (box 16) = $145,725.00

State W/H (box 17) = $ 5,435.00

Page B-3

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 (not used for educational purposes)

410

2015 federal income tax refund received in 2016

2,007

2015 state income tax refund received in 2016

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 2016 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 Mrs. 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

Doctors’ bills for grandmother

2,960

Nursing home for grandmother

9,200

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 the contributions were in cash and none more than $250 at any one time)

4,100

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 2015 taxes

625

Required

Prepare a Form 1040, Schedule A, and Schedule B for the completion of the Reyeses 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.

Answer 1

Form

1040

Department of the Treasury––Internal Revenue Service      (99)

2017

U.S. Individual Income Tax Return

OMB No. 1545-0074

IRS Use Only—Do not write or staple in this space.

For the year Jan. 1--Dec. 31, 2017, or other tax year beginning

,2017, ending

See separate instructions.

Your first name and initial

Last name

Your social security number

Jamie

Reyes

412-34-5670

If joint return, spouse's name & initial

Last name

Spouse's social security number

Cecilia Reyes

412-34-5671

Home address (number and street). If you have a P.O. box, see instructions.

Apt. no.

Make sure the SSN(s) above and on line 6c are correct.

5677 Apple Cove Road, Boise,

City, town or post office, state, and ZIP code. If you have a foreign address, also complete spaces below (see instructions).

Presidential Election Campaign

ID 83722

Check here if you, or your spouse if filing jointly, want $3 to go to this fund. Checking a box below will not change your tax or

Foreign country name

Foreign province/state/county

Foreign postal code

refund.

You

Spouse

Filing Status

1

Single

4

Head of household (with qualifying person). (See instructions.)

2

x

Married filing joint return (even if only one had income)

If the qualifying person is a child but not your dependent, enter

Check only one

3

Married filing separate return. Enter spouse's SSN above

this child’s name here.

box.

and full name here.

5

Qualifying widow(er) (see instructions)

Boxes checked on 6a and 6b.

6a

X

Yourself.

If someone can claim you as a dependent, do not check box 6a .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .

2

No. of children on 6c who:

Exemptions

b

X

Spouse .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .

c

Dependents:

(2) Dependent's

(3) Dependent's

(4)       if child under age 17

• lived with you

social security

relationship to

qualifying for child tax credit

• did not live with

If more than four

(1) First name

Last name

number

you

(see instructions)

you due to divorce or separation (see instructions)

dependents, see

Carmen

412-34-5672

Daughter

0

instructions and

Maria

412-34-5673

Grand Mother

0

check here.

Gustavo

412-34-5674

Son

x

1

Dependents on 6c not entered above

0

Add numbers on lines above

d

Total number of exemptions claimed .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .

1

2

Income

7

Wages, salaries, tips, etc. Attach Form(s) W-2

.   .   .   .   .   .   .   .   .

7

145,625

8

a

Taxable interest. Attach Schedule B if required.   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .

8a

1,492

Attach Form(s)

b

Tax-exempt interest. Do not include on line 8a

.   .   .   .   .   .   .   .   .

8b

0

W-2 here. Also

9

a

Ordinary dividends. Attach Schedule B if required.   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .

9a

0

attach Forms

b

Qualified dividends

.   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .

9b

2,500

W-2G and

10

Taxable refunds, credits, or offsets of state and local income taxes   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .

10

1099-R if tax

11

Alimony received

.   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .

.   .   .   .   .   .   .   .

11

was withheld.

12

Business income or (loss). Attach Schedule C or C-EZ.   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .

12

0

13

Capital gain or (loss). Attach Schedule D if required. If not required, check here.

####

13

If you did not

14

Other gains or (losses). Attach Form 4797

.   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .

14

get a W-2,

15

a

IRA distributions

15a

0

b

Taxable amount

.   .   .   .   .

15b

0

see instructions.

16

a

Pensions and annuities

16a

0

b

Taxable amount

.   .   .   .   .

16b

0

17

Rental real estate, royalties, partnerships, S corporations, trusts, etc.     Attach Schedule E.

17

(14,091)

18

Farm income or (loss). Attach Schedule F.   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .

18

0

19

Unemployment compensation . .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .

19

20

a

Social security benefits

20a

0

b

Taxable amount .   .   .   .   .   .   .

20b

0

21

Other income. List type and amount.

21

0

22

Combine the amounts in the far right column for lines 7 through 21.

This is your total income

22

133,026

Tax and		38		Amount from line 37 (adjusted gross income)													0	0		0			0		38	133,026
Credits		39	a	Check			You were born before					January 2, 1953						Blind.   Total boxes					0
Standard				if:			Spouse was born before						January 2, 1953					Blind.   checked				39a
Deduction for --			b	If your spouse itemizes on a separate return or you were a dual-status alien, check here																			39b
•	People who check any box on line 39a or 39b or who can be claimed as a dependent, see instructions.	40		Itemized deductions (from Schedule A) or your standard deduction (see left margin)																				.   .   .   .   .	40	12,700
		41		Subtract line 40 from line 38																				.   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .	41	120,326
		42		Exemptions.		If line 38 is $156,900 or less, multiply $4,050 by number on line 6d. Otherwise, see instructions.																			42	8,100
		43		Taxable income.			Subtract line 42 from line 41. If line 42 is more than line 41, enter -0-																	.   .   .   .   .   .	43	112,226
		44		Tax (see instructions). Check if any tax is from: a									Form(s) 8814      b					Form 4972 c							44	19,284
		45		Alternative minimum tax (see instructions). Attach Form 6251																				.   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .	45	0
		46		Excess advance premium tax credit repayment. Attach Form 8962																				.   .   .   .   .   .   .   .   .   .   .   .   .   .   .	46
•	All others:	47		Add lines 44, 45, and 46																				.   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .	47	19,284
	Single or Married filing separately,	48		Foreign tax credit. Attach Form 1116 if required													.   .   .   .   .   .   .   .	48		0
		49		Credit for child and dependent care expenses. Attach Form 2441 .   .   .													.	49		0
	$6,350	50		Education credits from Form 8863, line 19													.   .   .   .   .   .   .   .   .   .	50
	Married filing jointly or qualifying widow(er)	51		Retirement savings contributions credit. Attach Form 8880.													.   .   .	51
		52		Child tax credit. Attach Schedule 8812, if required													.   .   .   .   .   .   .   .	52
	$12,700	53		Residential energy credits. Attach Form 5695													.   .   .   .   .   .   .   .   .   .	53
	Head of household	54		Other credits from Form:   a						3800       b			8801 c					54
		55		Add lines 48 through 54.								These are your total credits   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .													55	0
	$9,350	56		Subtract line 55 from line 47. If line 55 is more than line 47, enter -0 -																			.   .   .   .   .   .   .   .   .   .   .   .		56	19,284
		57		Self-employment tax. Attach Schedule SE   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .																					57	0
	Other	58		Unreported social security and Medicare tax from Form:												a		4137	b		8919				58
	Taxes	59		Additional tax on IRAs, other qualified retirement plans, etc. Attach Form 5329 if required .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .																					59
		60	a	Household employment taxes from Schedule H																Check box to indicate full-year coverage.					60a
			b	First-time homebuyer credit repayment. Attach Form 5405 if required																					60b
		61		Health care: individual responsibility (see instructions)											Full-year coverage										61
		62		Taxes from: a			Form 8959 b				Form 8960 c		Instructions; enter code(s)												62	0
		63		Add lines 56 through 62.					This is your total tax															.   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .	63	19,284
	Payments	64		Federal income tax withheld from Forms W-2 and 1099													.   .   .   .   .   .	64		16,813
		65		2017 estimated tax payments & amount applied from 2016 return													.	65
	If you have a	66	a	Earned income credit (EIC)													.   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .	66a
	qualifying		b	Nontaxable combat pay election							.   .   .   .	66b
	child, attach	67		Additional child tax credit. Attach form 8812													.   .   .   .   .   .   .   .   .   .	67		0
	Schedule EIC.	68		American opportunity credit from Form 8863, line 8													.   .   .   .   .   .   .	68
		69		Net premium tax credit. Attach Form 8962													.   .   .   .   .   .   .   .   .   .   .	69
		70		Amount paid with request for extension to file													.   .   .   .   .   .   .   .   .   .	70
		71		Excess social security and tier 1 RRTA tax withheld													.   .   .   .   .   .   .	71		0
		72		Credit for federal tax on fuels. Attach Form 4136													.   .   .   .   .   .   .   .	72
		73		Credits from Form: a				2439   b			Resvd c		8885 d					73
		74		Add lines 64, 65, 66a, and 67 through 73.									These are your				total payments						.   .   .   .   .   .   .		74	16,813
	Refund	75		If line 74 is more than line 63, subtract line 63 from line 74.													This is the amount you overpaid								75	0
	Direct deposit?	76	a	Amount of   line 75 you want refunded to you.																	If Form 8888 is attached, check here				76a	0
	See		b	Routing number													4c Type:		Checking				Savings			Check sheet 2210
	instructions.		d	Account number																						to see if any tax
		77		Amount of line 75 you want													applied to your 2018 estimated tax	77								penalty is applicable.
	Amount	78		Amount you owe.																			Subtract line 74 from line 63. For details on how to pay, see instructions		78	2,471