Use the following information to complete Johnelle and Latoya Henry’s 2016 federal income tax return. If information is missing, use reasonable assumptions to fill in the gaps.
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Johnelle Henry is employed as a human resources manager for Toys Unlimited, Inc., and Latoya is a financial planner for her mother’s company, Long-term Investments, Inc., a full-service wealth-planning firm. They provide the following information:
They both want to contribute to the presidential election campaign.
They live at 9876 Old Waverly, Charleston, South Carolina.
Johnelle’s birthday is 7/17/1965 and his Social Security number is 555-12-6789.
Latoya’s birthday is 9/11/1967 and her Social Security number is 987-65-4321.
Johnelle or Latoya do not have any foreign bank accounts or trusts.
Johnelle received a Form W-2 from Toys Unlimited, Inc. that contained the following information:
|• Line 1 Wages, tips, other compensation:||$45,000|
|• Line 2 Federal income tax withheld:||7,500|
|• Line 3 Social Security wages:||45,000|
|• Line 4 Social Security tax withheld:||2,790|
|• Line 5 Medicare wages and tips:||45,000|
|• Line 6 Medicare tax withheld:||653|
|• Line 17 State income tax:||2,200|
Latoya received a Form W-2 from Long-term Investments, Inc. that contained the following information:
|• Line 1 Wages, tips, other compensation:||$85,000|
|• Line 2 Federal income tax withheld:||12,500|
|• Line 3 Social Security wages:||85,000|
|• Line 4 Social Security tax withheld:||5,270|
|• Line 5 Medicare wages and tips:||85,000|
|• Line 6 Medicare tax withheld:||1,233|
|• Line 17 State income tax:||4,200|
Johnelle and Latoya incurred the following medical expenses for the year:
|• Transportation to Chicago for Johnelle’s cancer treatment:||2,000 miles|
|• Unreimbursed hospital charges for Johnelle:||$6,500|
|• Unreimbursed prescription drug charges for Johnelle and Latoya:||1,750|
|• Unreimbursed physician charges for Johnelle and Latoya:||2,200|
|• Unreimbursed prescription glasses for Latoya:||150|
|• Laser hair treatment for Latoya (so that she will no longer need to shave her legs)||2,000|
Johnelle and Latoya paid $12,000 of interest payments on their primary residence (acquisition debt of $225,000). They also paid $1,750 of interest expense on Latoya’s car loan and $500 of interest on their Visa card.
Johnelle and Latoya paid $4,000 of real estate taxes on their home and $1,000 of real estate tax on a vacant lot they purchased with the hope of building their dream home in the future. They also paid $3,000 in sales tax on Latoya’s car and other purchases and $1,000 of ad valorem tax on their cars.
Johnelle and Latoya made the following contributions this year:
|• American Red Cross||$ 200|
|• United Way||150|
|• St. Joseph’s Catholic Church||8,000|
|•Food for the family of Hannah Barbara (a neighbor who suffered a tragic car accident this past year)||225|
|• Stock transfer to the University of South Carolina (originally purchased for $1,000 in 2005)||750|
Johnelle incurred $4,000 of unreimbursed meals and entertainment related to his job. Latoya incurred $1,200 of expenses for investment publications, and last year they paid their CPA $500 to prepare their tax return.
The roof on Johnelle and Latoya’s house was severely damaged in a hail storm. They had to replace the roof ($7,500), which unfortunately was not covered by insurance because of their high deductible ($10,000).
Johnelle won $5,000 in the state lottery. He has been playing the lottery for years [$10 in lottery tickets every week ($520 in total) that he saves to keep track of the numbers he plays].
Johnelle and Latoya have qualifying insurance for purposes of the Affordable Care Act (ACA).