Comprehensive Individual Return Problem. Cletus and Josepha Mayor have been married for twelve years and currently live at 2907 Seven Oaks Lane, Columbia, SC 29210. Their Social Security numbers are 223-34-4444 and 322-32-2222, respectively. They have two daughters, Sheena, age 10, (SSN 34444-1234) and Carletta, age 7, (SSN 566-55-6543) who live with them and are fully supported by them.
Cletus is a manager for a local building contractor and earned a salary of $59,800 for the current tax year. He had $5,600 withheld for federal income taxes and $1,300 for state income taxes. Josepha is an elementary school teacher and earned $31,950. She had $2,280 withheld for federal income taxes and $700 for state income taxes.
On July 20 they purchased a new home for $210,000. The last five years they have lived in rented homes or apartments because they moved frequently for Cletus’s job before settling in Columbia. They paid total mortgage interest on their new home of $7,250 for the period of time they owned the home, all of which was reported to them on Form 1098. Points incurred on the purchase of the new home were $1,800 (also reported on Form 1098).
Cletus contributed $2,000 to his Roth IRA and Josepha contributed $1,000 to hers.
They paid $1,200 in premiums for medical and dental insurance, had $2,800 in unreimbursed doctor and dentist bills, and paid $300 for an unreimbursed hospital bill.
They paid property taxes of $1,825 on the new home, which was properly allocated between them and the seller on their closing statement.
In June, they renewed the license plates on their two cars paying a total of $265. This amount included a flat fee of $40 per auto plus one percent based on the value of the autos. They also paid a total of $1,100 in state general sales taxes during the year.
They contributed $500 in cash to their church this year.
Josepha spent $1,120 on materials for use in her classroom. She spent $1,400 on tuition for two courses leading to her master’s degree in education at State College (59-9812345). She received a Form 1098T reporting the $1,400 in box 1 and box 9 was checked indicating she was a graduate student. Cletus took two continuing education courses to maintain his general contractor’s license. These courses cost $300 and were not reimbursed by his employer.
Just prior to moving to the new home, the Mayor’s had a party for the neighbors to say “goodbye.” During the party, Josepha took off her diamond ring while she was working in the kitchen. When she went to get the ring later, it was gone. It was established that the ring had been stolen and could not be recovered. The ring cost $3,700 when purchased five years before. Because Josepha had replacement value insurance on the ring, she received $5,000 from the insurance company to acquire a substantially similar ring. She decided not to purchase a replacement.
Josepha paid $2,300 in after-school child care expenses ($1,150 for each daughter) to Dawn-to-Dusk Care, 18 Elk Grove Street, Columbia, SC 29210, EIN 59-12345678.
The couple earned $90 in interest on their savings and checking accounts with the First National Bank of South Carolina and $220 in interest on the Teacher’s Union money market fund. They have no foreign accounts and no one in the family was ever convicted of a felony.
Complete Form 1040 (married filing jointly) and any required related forms and schedules for the Mayors using the latest forms available on the IRS Web site at www.irs.gov.
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