Accounting
Tax Return
James R. and Patricia L. Link are married and live at 541 Memory Lane, Evansville, IN 47712. James works for the local visitors bureau, and Patricia works part time as a medical transcriptionist. During 2014, the Links had the following receipts:
Salaries (61,000 for James and 41,000 for Patricia) $102,000
Interest income:
City of Evansville Bonds 1,000
General Electric Bonds 1,100
Old National certificate of deposit 400
Child support from Bob Stone 9,200
Gifts from parents 26,000
Settlement from Greyhound tours 90,000
Lottery winnings 600
Federal tax refund from tax year 2013 400
Patricia had been married to Bob Stone. When they divorced several years ago she was awarded custody of their children, Shannon and Wesley. (Patricia has never signed a Form 8332 waiver).
In June while going to dinner in Evansville, Patricia was injured by a Greyhound bus. The driver was clearly at fault, so Greyhound paid her medical expenses. In addition, Greyhound paid her $90,000 in settlement of her personal injuries sustained.
The Links had the following expenditures:
Medical expenses not covered by insurance $7,200
Taxes:
Property taxes on personal residence 3,600
State of Indiana income taxes withheld 4,200
Interest on home mortgage 6,000
Paid church donation 3,600
Life insurance premiums on James’ life 1,200
Contribution to traditional IRA (on Patricia’s behalf) 5,000
Parking tickets 150
Contribution to the Re-elect Winnecke campaign (mayor) 600
Funeral expenses for Paul Buttram 6,300
As a part-time employee, Patricia is not covered under her employer’s pension plan, so she provides for her own retirement with a traditional IRA. Because the mayor is a member of the visitors bureau board, James felt compelled to make the political contribution.
The Link’s household includes the following, for whom they provide more than half the support:
Social Security Number Birthdate
James Link 123-45-6786 12/16/1972
Patrticia Link 123-45-6787 8/8/1974
Shannon Stone 123-45-6788 10/9/1995
Wesley Stone 123-45-6789 5/3/1997
Paul Buttram 123-45-6785 6/15/1939
Shannon graduated from high school on May 9, 2014, and is undecided about college. During 2014, she earned $8,500 (which was placed in a savings account) through a part-time job. Paul is Patricia’s widowed father who died January 3, 2014. For the past several years, Paul has qualified as a dependent of James and Patricia.
Federal income tax withheld is $5,200 (James) and $3,100 (Patricia). The proper amount of Social Security and Medicare tax was withheld.
Prepare a joint income tax return for the Links for 2014 including all required forms. They want to contribute to the Presidential Election Campaign fund. All members of the family had health insurance for the entire year. If they have an overpayment, they want it refunded.