Reference no: EM132462759

Essentials of Federal Income Taxation

Use the following information to prepare the joint income tax return of Frank and Sandra Anderson Use Form 1040, Schedule A, and Form 2441. All parties sign and date the return on April 1, 2019. This problem is suitable for manual preparation or computer software application. Frank A. (SSN 811-26-3717) and Sandra K. (SSN 820-47-9231) Anderson (ages 48 and 51. respectively) reside at 2121 Century Avenue, Middleton, CA 92657, with their three children whom they fully support: Mandy (age 9, SSN 998-21-5246), Charles (age 1 1, SSN 998-21- 5247), and Carol (age 14, SSN 998-21-1827).

The Andersons file a joint return, and neither elects to have $3 go to the Presidential election campaign fund. Frank is employed as a customer service representative. Sandra is employed as a computer operator. Details of their salaries and withholdings, are as follows:

           GrossWages           State IncomeTax    Federa lIncome Tax     SocialSecurity    Medicare Tax Withheld

                                             Withheld                   Withheld             TaxWithheld                                          

Frank      $66,500                     $4,792                    $6,700                  $4, 123                          $964

Sandra     40,343                       3, 087                  2,980                     2,501                             585

• Frank's employer provides him with full family health care coverage as a tax-free employee benefit. Part of Frank's compensation package also includes group-term life insurance equal to 75% of his annual salary. The cost to the company for the premium was $240.

• In August, Sandra earned $400 of interest when she cashed in a certificate of deposit from State Bank. The Middleton Farmers Bank credited $300 of interest to the Andersons' joint savings account during the year. The Andersons overpaid their 2018 state income taxes by $142. They received their refund in June. The Andersons' itemized deductions exceeded the standard deduction by $2,300 last year.

• Since they both work outside the home, they are unable to be there when their children return home from school. This year the Andersons paid a neighbor, Gloria Dryden (SSN 992-31-4270), $4, 100 to care for Mandy and Charles in her home after school hours and during the summer vacation period while the Andersons were at work. Gloria's address is 2132 Century Avenue, Middleton, CA 92657. During the year, Sandra received unemployment compensation of $6,000. Frank is covered by a qualified pension plan at work; Sandra is not. The Andersons are interested in contributing to their respective traditional IRAs the maximum that they can deduct on their 2019 tax return.

• Both contributions take place before April 15, 2020.