COMPREHENSIVE PROBLEM
With Emphasis on Schedule A
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 6/15/1966) and Cecilia's is 412-34-5671 (date of birth 4/12/1968). They provide more than half of the support of their daughter, Carmen (age 23), social security number 412-34-5672 (date of birth 9/1/1992), 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 11/6/1945), 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 3/14/2011). 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) = $ 21,812.50
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
Other receipts for the couple were as follows:
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Dividends (all qualified dividends)
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$2,500
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Interest income:
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Union Bank
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$ 220
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State of Idaho-interest on tax refund
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22
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City of Boise school bonds
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1,250
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Interest from U.S. savings bonds
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410
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(not used for educational purposes)
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|
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2014 federal income tax refund received in 2015
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2,007
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2014 state income tax refund received in 2015
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218
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Idaho lottery winnings
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1,100
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Casino slot machine winnings
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2,250
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Gambling losses at casino
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6,500
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Other information that the Reyeses provided for the 2015 tax year:
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Mortgage interest on personal residence
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$11,081
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Loan interest on fully equipped motor home
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3,010
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Doctor's fee for a face-lift for Mrs. Reyes
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8,800
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Dentist's fee for a new dental bridge for Mr. Reyes
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3,500
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Vitamins for the entire family
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110
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Real estate taxes paid
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$ 5,025
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DMV fees on motor home (tax portion)
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1,044
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DMV fees on family autos (tax portion)
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436
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Doctors' bills for grandmother
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2,960
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Nursing home for grandmother
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9,200
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Wheelchair for grandmother
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1,030
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Property taxes on boat
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134
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Interest on personal credit card
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550
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Interest on loan to buy public school district bonds
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270
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Cash contributions to church (all the contributions were in cash and none more than $250 at any one time)
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4,100
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Cash contribution to man at bottom of freeway off-ramp
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25
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Contribution of furniture to Goodwill-cost basis
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4,000
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Contribution of furniture to Goodwill-fair market value
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410
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Tax return preparation fee for 2014 taxes
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625
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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.