Kathy and Rob Alvarez obtained a divorce effective May 1, 2018, and there have been no revisions to the original
Kathy and Rob Alvarez obtained a divorce effective May 1, 2018, and there have been no revisions to the original agreement since that time. In accordance with the divorce decree, Kathy was required to pay $2,450 per month until their only child turns 18; then the payments would be reduced to $1,500 per month. Rob has full custody of the child and appropriately takes the child credit. Furthermore, Kathy was to transfer title of their house, which had a cost of $250,000 and a fair value of $410,000 on the date of transfer, to Rob and was to continue making the monthly mortgage payments of $1,525 on behalf of Rob. Kathy works for a large oil distributor in Santa Fe, NM, and after the divorce lives at 1132 Northgate Avenue, Santa Fe, NM 87501. Kathy’s social security number is 412-34-5671 (date of birth 11/4/1987), and Rob’s social security number is 412-34-5670 (date of birth 8/14/1985). Her W-2 contained the following information: Wages (box 1) = $ 85,100.25 Federal W/H (box 2) = $ 4,861.75 Social security wages (box 3) = $ 85,100.25 Social security W/H (box 4) = $ 5,276.22 Medicare wages (box 5) = $ 85,100.25 Medicare W/H (box 6) = $ 1,233.95 She also received a Form 1099-INT from First New Mexico Bank with $256 of interest income in box 1. In addition, Kathy made a timely $2,500 contribution to her new HSA account. Required: Prepare a 2021 Form 1040 and a Schedule 1 as well as a Form 8889 for Kathy.