Lance H. and Wanda B. Dean are married and live at 431 Yucca Drive, Santa Fe, NM 87501. Lance works for the convention bureau of the local Chamber of Commerce, while Wanda is employed part-time as a paralegal for a law firm. During 2015, the Deans recorded the following receipts.

Wanda previously was married to John Allen. When they divorced several 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 and child support-the alimony payments were to terminate if Wanda remarried.
In July, while going to lunch in downtown Santa Fe, Wanda was injured by a tour bus. As the driver was clearly at fault, the owner of the bus, Roadrunner Touring Company, paid her medical expenses (including a one-week stay in a hospital). To avoid a lawsuit, Roadrunner also transferred to her $90,000 cash in settlement of the personal injuries she sustained.
The Deans made the following 2015 expenditures.

The life insurance policy was taken out by Lance several years ago and designates Wanda as the beneficiary. As a part-time employee, Wanda is excluded from coverage under her employer's pension plan. Consequently, she provides for her own retirement with a traditional IRA obtained at a local trust company. Because the mayor is a member of the local Chamber of Commerce, Lance felt compelled to make the political contribution.
The Dean household includes the following, for whom they provide more than half of the support.
................................Social Security...................... Number Birth Date
Lance Dean (age 42).......... 123-45-6786................................. 12/16/1973
Wanda Dean (age 40) ......... 123-45-6787................................. 08/08/1975
Penny Allen (age 19) .......... 123-45-6788................................. 10/09/1996
Kyle Allen (age 17) .......... 123-45-6789................................... 05/03/1998
Wayne Dean (age 75) .......... 123-45-6785................................. 06/15/1940
Penny graduated from high school on May 9, 2015, and is undecided about college. This year, she earned $8,500 (placed in a savings account) playing a harp in the lobby of a local hotel. Wayne is Lance's widower father who died on January 20, 2015. For the past few years, Wayne qualified as a dependent of the Deans.
Federal income tax withheld is $5,200 (Lance) and $3,100 (Wanda). The proper amount of Social Security and Medicare tax was withheld. All members of the family were covered by health insurance for all of 2015.
Determine the 2015 Federal income tax for the Deans on a joint return by completing the appropriate forms. They do not want to contribute to the Presidential Election Campaign Fund. If an overpayment results, it is to be refunded to them. Suggested software: H&R BLOCK Tax Software.

Transcribed Image Text:

Salaries ($60,000 for Lance, $41,000 for Wanda) Interest income 101,000 $1,000 1,100 City of Albuquerque general purpose bonds Ford Motor Company bonds Ally Bank certificate of deposit Child support payments from John Allen Annual gifts from parents Settlement from Roadrunner Touring Company Lottery winnings Federal income tax refund (for tax year 2014) 2,500 7,200 26,000 90,000 600 섹)() $7,200 Medical expenses (not covered by insurance) Taxes Property taxes on personal residence $3,600 State of New Mexico income tax (indudes 7800 6,000 3,600 1,200 5,000 300 amount withheld from wages during 2015) 4,200 Interest on home mortgage Paid church pledge Contribution to traditional IRA (on Wanda's behalf) Traffic fines Contribution to the reelection campaign fund of the mayor of Santa Fe Funeral expenses for Wayne Boyle S00 6,300