Question

Penny Lawrence is a research scientist in Miama, Florida. Her husband Lary Lawrence stays home to take care of their two young children, George (age 11) and Allie (age 9). Penny's total wages for 2019 were $73,023 from which $6,418 of federal income tax was withheld.  Florida does not have a state income tax.

They had $213 in interest income. Penny received dividends from Exxon in the amount of $434 and Lary received dividends from First National Bank in the amount of $324.   The additionally received interest on a State of Florida bond in the amount of $42.  They gave $4,418 to their church, $2000 to the Committee to Elect Sam Spade, and gave a bag of clothing valued at $471 to the Salvation Army (they have a receipt).   The Kenzie’s paid taxes on their house in the amount of $3,210.

Penny attended the University of Florida and is still paying off her student loans.  She paid $4800 in student loans this year, and $196 of that amount was interest.

The Lawrence’s paid $6,281 in medical insurance premiums (after tax dollars).  They also paid $523 in doctor’s visits and $481 for new glasses. Penny Lawrence is a big believer in vitamins and spent $522 at the GNC this year on supplements.

The Lawrence’s mortgage payment is $1,546 per month.  80% of their total mortgage payment is interest. Penny receives child support from her ex-husband in the amount of $300 per month. They were divorced in 2014.

Lary likes to play the nickel slots.  He went to Las Vegas for a trip with the guys.  He won $2,291 on the slot machines.  He didn’t tell Penny, however, that it cost him in nickels $1,143 to win that money.

Prepare the Penny's 2019 Form 1040 tax return and any necessary schedules.  Calculate their 2019 federal income tax and determine if they owe additional taxes or are receiving a refund.

Answer 1

Total taxes are estimated at $4,741. The tax refund is $21,232.

This is 5.64% of the total income of $84,109. Total tax payments for the year were $25,973. Tax refund is estimated at $21,232. This puts her in the 12% tax bracket.

Penny's 2019 Form 1040 tax return given below