Richard and Mary Smith file a joint tax return, they have no dependents. Richard was born in 1949 and Mary in 1950. Richard is retired from the State of Michigan and receives a pension of $28,000; which is fully taxable for federal income purposes. Richard also works part-time at Wal-Mart and earned $5,800. Mary spends her time volunteering; however during the year received a $12,200 distribution from her IRA account; also 100% taxable for federal income purposes.
Richard and Mary invested in US Savings Bonds and their local Nowhere MI municipal bonds. They redeemed a number of US Savings Bonds this year and thus earned interest of $1,200. The municipal bond paid them $600 of interest.
Richard and Mary paid property taxes of $2,900 and their home which is assessed at $115,000. Richard had $900 withheld from his pension and $0 from Wal-Mart for state income taxes. Mary did not have any funds withheld from her IRA distribution for state income taxes. Richard paid for medical and dental insurance for him and Mary which cost $2,100.
Richard and Mary purchased items from out of state and did not pay Michigan sales tax; however they did not keep track of the receipts.
Social Security Numbers: Richard 123-43-5678 Mary 987-65-4321
Address: 123 Oak Street Nowhere, MI 49870
Required:
a. Complete page 1 of the federal 1040 for Richard and Mary.
b. Complete the Michigan 1040 Income tax form, Schedule 1, Form 1040CR property tax credit, Schedule W, and Form 4884 pension schedule