Question

NOTE: THIS IS ALL INFORMATION PROVIDED

Eric Mendes and Becky Conners, each age 42, married on September 7, 2016. Eric and Becky will file a joint return for 2018. Eric’s Social Security number is 444-55-6667. Becky’s Social Security number is 321-21-4321. Becky adopted Mendes as her married name. They live at 4450 Emerald Street, Los Angeles, California 90032.

Eric divorced his former wife, Sara Mendes, in March of 2016. Under the divorce agreement Eric pays Sara $1,250 per month for the next 10 years or until Sara’s death, whichever comes first. During 2018, Eric made all twelve payments to her. In addition, Eric paid Sara $22,000 which is designated as being for her share of the marital property. Eric and Sara had no children. Sara’s Social Security number is 677-76-9292.

Eric’s 2018 salary is $150,000. He is an executive working for Maple Manufacturing Company. As part of his compensation package, Maple provides him with group term life insurance equal to twice his annual salary. His employer withheld $25,000 for federal income taxes and $8,500 for California income taxes.

Becky recently graduated from law school and is employed by the law firm of Davis and Davis. She received a salary of $85,000 in 2018. Her employer withheld $9,000 for federal income taxes and $4,000 for California income taxes.

Eric and Becky had $550 of interest income from Bank of America. They received a $1,900 refund on their 2017 California income tax return during the year. They itemized deductions during 2017 (itemized deductions exceeded their standard deduction by $600). During 2018 they paid $7,200 of mortgage interest and $8,000 of property taxes on their personal residence. They made charitable cash contributions of $1,800 to their church during 2018. Both spouses had health insurance the entire year and do not want to contribute to the Presidential Election Campaign.

Prepare Eric and Becky’s 2018 federal income tax return. Part of your assignment is to select the forms necessary to prepare this income tax return. Forms are available at IRS.gov

Answer 1

Form 1040:-

Form 1040 - page 2

Form 1040 - Schedule 1

2018 Schedule B - Interest and Dividend Income

2018 - Schedule A - Itemized deduction