Michelle J. and Fred M. Smith aremarried taxpayers who file a joint return. Their Social Securitynumbers are 123-45-6789 and 111-11-1112, respectively. Michelle’sbirthday is September 21, 1971, and Fred’s is June 27, 1970. Theylive at 473 Revere Avenue, Stony Brook, 01850. Michelle is theoffice manager for Stony Brook Dental Clinic, 433 Broad Street,Stony Brook, NY 01850 (employer identification number 98-7654321).Fred is the manager of a Super Burgers fast-food outlet owned andoperated by Plymouth Corporation, 1247 Central Avenue, Hauppauge,NY 11788 (employer identification number 11-1111111).?

The following information is shown ontheir Wage and Tax Statements (Form W–2) for 2018.

Line	Description	Michelle	Fred
1	Wages, tips, other compensation	$58,000	$62,100
2	Federal income tax withheld	4,500	5,300
3	Social Security wages	58,000	62,100
4	Social Security tax withheld	3,596	3,850
5	Medicare wages and tips	58,000	62,100
6	Medicare tax withheld	841	900
15	State	New York	New York
16	State wages, tips, etc.	58,000	62,100
17	State income tax withheld	2,950	3,100

The Smiths provide over half of thesupport of their two children, Cynthia (born January 25, 1994,Social Security number 123-45-6788) and John (born February 7,1998, Social Security number 123-45-6786). Both children arefull-time students and live with the Smiths except when they areaway at college. Cynthia earned $6,200 from a summer internship in2018, and John earned $3,800 from a part-time job.?

During 2018, the Smiths provided 60%of the total support of Fred’s widower father, Sam Smith (bornMarch 6, 1942, Social Security number 123-45-6787). Sam lived aloneand covered the rest of his support with his Social Securitybenefits. Sam died in November, and Fred, the beneficiary of apolicy on Sam’s life, received life insurance proceeds of$1,600,000 on December 28.?

The Smiths had the following expensesrelating to their personal residence during 2018:

Property taxes	$5,000
Qualified interest on home mortgage(acquisition indebtedness)	8,700
Repairs to roof	5,750
Utilities	4,100
Fire and theft insurance	1,900
The Smiths had the following medicalexpenses for 2018:
Medical insurance premiums	$4,500
Doctor bill for Sam incurred in 2017and not paid until 2018	7,600
Operation for Sam	8,500
Prescription medicines for Sam	900
Hospital expenses for Sam	3,500
Reimbursement from insurance company,received in 2018	3,600
The medical expenses for Sam representmost of the 60% that Fred contributed toward his father’ssupport.? Other relevant informationfollows:

•                    Whenthey filed their 2017 state return in 2018, the Smiths paidadditional state income tax of $900.

•                    During2018, Michelle and Fred attended a dinner dance sponsored by theStony Brook Police Disability Association (a qualified charitableorganization). The Smiths paid $300 for the tickets. The cost ofcomparable entertainment would normally be $50.

•                     TheSmiths contributed $5,000 to Stony Brook Presbyterian Church andgave used clothing (cost of $1,200 and fair market value of $350)to the Salvation Army. All donations are supported by receipts, andthe clothing is in very good condition.

•                     Viaa crowdfunding site (gofundme.com), Michelle and Fred made a giftto a needy family who lost their home in a fire ($400). Inaddition, they made several cash gifts to homeless individualsdowntown (estimatedto be $65).

•                     In2018, the Smiths received interest income of $2,750, which wasreported on a Form 1099–INT from Second National Bank, 125 OakStreet, Stony Brook, NY 01850 (Employer Identification Number98-7654322).

•                     Thehome mortgage interest was reported on Form 1098 by Stony BrookCommercial Bank, P.O. Box 1000, Stony Brook, NY 01850 (EmployerIdentification Number 98-7654323). The mortgage (outstandingbalance of $425,000 as of January 1, 2018) was taken out by theSmiths on May 1, 2014.

•                    Michelle’semployer requires that all employeeswear uniforms to work. During2018, Michelle spent $850 on new uniforms and $566 on laundrycharges.

•                     Fredpaid $400 for an annual subscription to the Journal ofFranchise Managementand $741 for annual membership dues to hisprofessional association.

•                    NeitherMichelle’s nor Fred’s employer reimburses for employeeexpenses.

•                     TheSmiths do not keep the receipts for the sales taxes they paid andhad no major purchases subject to sales tax.

•                     Allmembers of the Smith family had health insurance coverage for allof 2018.

•                     Thisyear the Smiths gave each of their children $2,000, which was thendeposited into their Roth IRAs.

•                    Michelleand Fred paid no estimated Federal income tax. Neither Michelle norFred wants to designate $3 to the Presidential Election CampaignFund.

REQUIRED: TaxComputation?

Prepare their Federal and NYS taxreturns. Compute net tax payable or refund due for Michelle andFred Smith for 2018. If they have overpaid, they want the amount tobe refunded to them. If you use tax forms for your computations,you will need Forms 1040 and Schedules A and B.?

You must prepare Form 1040,Schedules A & B and any other appropriate forms andschedules.  You may use tax software such as ProConnector TurboTax, or manually prepare their tax returns.

Prepare their Federal and NYS income tax returns. Assumethey were NYS residents for the entire year