Mrs. Cora Yank (age 42) is divorced and has full custody of her 10-year-old son, William. From the following information, compute Mrs. Yank’s federal income tax (including any AMT) and the amount due with her Form 1040 or the refund she should receive.
• Mrs. Yank works as a medical technician in a Chicago hospital. Her salary was $38,400, from which her employer withheld $2,700 federal income tax and $2,938 employee FICA tax.
• Several years ago, Mrs. Yank was seriously injured in a traffic accident caused by another driver’s negligence. This year, she received a $25,000 settlement from the driver’s insurance company: $20,000 as compensation for her physical injuries and $5,000 for lost wages during her convalescent period. Because she was unable to work for the first seven weeks of the year, she collected $1,400 unemployment compensation from the state of Illinois.
• Mrs. Yank earned $629 interest on a savings account. She contributed $800 to a regular IRA. She is not an active participant in any other qualified retirement plan.
• Mrs. Yank paid $10,800 rent on the apartment in which she and William live. She received $1,600 alimony and $2,350 child support from her former husband.
• Mrs. Yank is covered under her employer’s medical reimbursement plan. However, this year’s medical bills exceeded her reimbursement limit by $1,630.
• Mrs. Yank paid $2,062 income tax to Illinois.
• Mrs. Yank spent $470 on hospital shoes and uniforms. Her employer didn’t reimburse her for this expense.
• Mrs. Yank paid $1,300 for after-school child care for William.