Problem
Steve Jackson (age 51) is a single taxpayer living at 3215 Pacific Dr., Del Mar, CA 92014. His Social Security number is 465-88-9415. In 2015, Steve's earnings and income tax withholding as the manager of a local hotel are:
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Earnings from the Ocean View Hotel
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$121,000
|
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Federal income tax withheld
|
18,500
|
|
State income tax withheld
|
9,300
|
Steve's other income includes interest from General Electric bonds of $2,500 and interest on a savings account at Wells Fargo Bank of $3,210. Also, Steve received tax-exempt interest of $29,200 on private activity bonds that is subject to alternative minimum tax. Steve had full medical coverage for the entire tax year.
During the year, Steve paid the following amounts (all of which can be substantiated):
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Home mortgage interest
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$31,600
|
|
Credit card interest
|
1,760
|
|
Auto insurance
|
900
|
|
State income taxes paid in 2015 (for 2013 audit)
|
12,540
|
|
Property taxes on personal residence
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6,200
|
|
Kaiser HMO premiums
|
4,800
|
|
Other medical expenses
|
790
|
|
CPA fees paid to handle 2013 state audit
|
7,000
|
|
Charitable contributions:
|
|
|
Girl Scouts
|
800
|
|
San Diego State University (contribution)
|
10,000
|
|
Italian Red Cross
|
250
|
Required: Complete Steve's federal tax return for 2015. Use Form 1040,Schedule A, and Schedule B and Form 6251. Make realistic assumptions about any missing data.