Mike Smith is 40 years old and is married to May Smith, and both are clients of

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Mike Smith is 40 years old and is married to May Smith, and both are clients of ABC Tax Firm that have come to you to file their Federal taxes. The Smiths live at 550 Beacon Road, Neverland, VA 23601. The couple files a joint return and have two dependent kids, Cheryl, age 17, and Judge, age 18. In 202X, Mike and his wife had the following transactions:

• Mike received $120k in salary from Blue Metal Corporation, where he is an Engineer. Withholding for Federal income tax was $10750. The amounts withheld for FICA were: $7049 for Social Security and $1,740 for Medicare. Mike worked in Mexico from January 1st, 20XX, until February 20th of the following year. His $120k salary for 202X includes $18k he earned for January and one-half of February 202X while in Mexico.

• Mike and May received $400 interest from Martin Country school bonds.

• Mike received $2300 interest from a Caribbean bank account.

• May received 50 shares of Bluebell Corporation common stock as a stock dividend. The shares had a fair-market value of $2500 at the time May received them, and she did not have the option of receiving cash.

• Mike and May received a $1200 refund on their prior year’s Virginia income taxes. Their itemized deductions in that year totaled $14k.

• Mike paid $6600 alimony to his ex, Pearl S. Moss. The divorce
was official 3-years ago.

Mike and May kept the receipts for their sales taxes paid of $1,200.
Mike and May’s itemized deductions were as follows:
- State income tax paid /withheld = $5,200.
- Real estate taxes on their main residence were $3,800.
- Mortgage interest on their principal residence was $2,600.
- Cash contributions to their church totaled $2,900.

Determine Mike’s federal tax. This assignment will give you an opportunity to complete a current Form 1040 (U.S. Individual Income Tax Return). Complete the form using the information provided in the scenario. Make realistic assumptions about any missing data, such as the Social Security numbers for Mike, May, and their kids.