Note: This problem is for the 2018 taxyear.

Lance H. and Wanda B. Dean are married and live at 431 YuccaDrive, Santa Fe, NM 87501. Lance works for the convention bureau ofthe local Chamber of Commerce, while Wanda is employed part-time asa paralegal for a law firm.

During 2018, the Deans had the following receipts:

Salaries ($60,000 for Lance, $41,000 for Wanda) $101,000 Interest income—    City of Albuquerque general purpose bonds $1,000    Ford Motor company bonds 1,100    Ally Bank certificate of deposit 400 2,500 Child support payments from John Allen 7,200 Annual gifts from parents 26,000 Settlement from Roadrunner Touring Company 90,000 Lottery winnings 600 Federal income tax refund (for tax year 2017) 400

Wanda was previously married to John Allen. When they divorcedseveral years ago, Wanda was awarded custody of their two children,Penny and Kyle. (Note: Wanda has never issued a Form 8332 waiver.)Under the divorce decree, John was obligated to pay alimony andchild support—the alimony payments were to terminate if Wandaremarried.

In July, while going to lunch in downtown Santa Fe, Wanda wasinjured by a tour bus. As the driver was clearly at fault, theowner of the bus, Roadrunner Touring Company, paid her medicalexpenses (including a one-week stay in a hospital). To avoid alawsuit, Roadrunner also transferred $90,000 to her in settlementof the personal injuries she sustained.

The Deans had the following expenditures for 2018:

Medical expenses (not covered by insurance) $7,200 Taxes—    Property taxes on personal residence $3,600    State of New Mexico income tax (includesamount withheld        from wages during 2018) 4,200 7,800 Interest on home mortgage (First National Bank) 6,000 Charitable contributions 3,600 Life insurance premiums (policy on Lance's life) 1,200 Contribution to traditional IRA (on Wanda's behalf) 5,000 Traffic fines 300 Contribution to the reelection campaign fund of the mayor ofSanta Fe 500 Funeral expenses for Wayne Boyle 6,300

The life insurance policy was taken out by Lance several yearsago and designates Wanda as the beneficiary. As a part-timeemployee, Wanda is excluded from coverage under her employer'spension plan. Consequently, she provides for her own retirementwith a traditional IRA obtained at a local trust company. Becausethe mayor is a member of the local Chamber of Commerce, Lance feltcompelled to make the political contribution.

The Deans' household includes the following, for whom theyprovide more than half of the support:

Social Security Number Birth Date Lance Dean (age 42) 123-45-6786 12/16/1976 Wanda Dean (age 40) 123-45-6787 08/08/1978 Penny Allen (age 19) 123-45-6788 10/09/1999 Kyle Allen (age 16) 123-45-6789 05/03/2002 Wayne Boyle (age 75) 123-45-6785 06/15/1943

Penny graduated from high school on May 9, 2018, and isundecided about college. During 2018, she earned $8,500 (placed ina savings account) playing a harp in the lobby of a local hotel.Wayne is Wanda's widower father who died on January 20, 2018. Forthe past few years, Wayne qualified as a dependent of theDeans.

Federal income tax withheld is $5,200 (Lance) and $2,100(Wanda). The proper amount of Social Security and Medicare tax waswithheld.

Required:

Determine the Federal income tax for 2018 for the Deans on ajoint return by providing the following information that wouldappear on Form 1040 and Schedule A. They do not want to contributeto the Presidential Election Campaign Fund. All members of thefamily had health care coverage for all of 2018. If an overpaymentresults, it is to be refunded to them.

·       Make realisticassumptions about any missing data.

·       Enter all amounts aspositive numbers.

·       If an amount box doesnot require an entry or the answer is zero, enter "0".

·       When computing thetax liability, do not round your immediate calculations. Ifrequired round your final answers to the nearest dollar.

Form 1040 Tax Items

Provide the following that would be reported on Lanceand Wanda Dean's Form 1040.

1. Filing status and dependents: Thetaxpayers' filing status:

Qualifies as the taxpayers' dependent: Select "Yes" or"No".
Penny:  
Kyle:

2. Calculate taxable grossincome.
$

3. Calculate the total adjustments forAGI.
$

4. Calculate adjusted grossincome.
$

5. Calculate the greater of thestandard deduction or itemized deductions.
$

6. Calculate total taxableincome.
$

7. Calculate the income taxliability.
$

8. Calculate the total tax creditsavailable.
$

9 Calculate total withholding and taxpayments.
$

10. Calculate the amount overpaid(refund):
$

11. Calculate the amount of taxesowed:
$