James and Sally Johnson are husband and wife and file a joint return. They live in Rockville,
Question:
James and Sally Johnson are husband and wife and file a joint return. They live in Rockville, MD. James is 67 years old and is retired and is receiving social security benefits. Sally is 66 years old and is also retired but working on a part-time basis. The Johnsons had qualifying health care coverage at all times during the tax year.
Annual Social Security income for James is $22,000 (SSA-1099, box 5) and for Sally is $13,800 (SSA-1099, box 5).
Interest received by them from Central Bank is $2,545 (1099-INT, box 1). No income tax withholding was made.
Sally is an employee working part-time as an interior decorator for Decorating House, a corporation. Her Form W-2 shows the following information:
Their itemized deductions are as follows:
1. Mortgage interest on their main home, $15,355.2. Real estate taxes, $4,250.3. State & Local Income taxes: $1,440.4. Doctors' expenses unreimbursed by insurance, $6,681.5. Medical insurance premiums for the year, $2,900.6. Prescribed medicine, $1,995.7. Vitamins, $300.8. Total cash contributions to their church, $675. The contributions were made over the course of the year, and no individual contribution was greater than $250.9. Tax preparation fees for their 2021 return, $325, paid in 2022.10. Lottery tickets bought by James during the year, $750. Winnings received, $940 (W-2G, box 1). Income tax withholding on winnings, $35 (W-2G, box 4).
Required:
Prepare their individual income tax return using the appropriate forms and schedules. They do not want to contribute to the presidential election campaign and do not want anyone to be a third-party designee. The Johnsons have not acquired any financial interest in virtual currency last year. For any missing information, make reasonable assumptions. Use the appropriate Tax Tables or Tax Rate Schedules.
Income Tax Fundamentals 2019
ISBN: 9781337703062
37th Edition
Authors: Gerald E. Whittenburg, Steven Gill