Question

Comprehensive Problem 5-1

John Williams (birthdate August 2, 1976) is a single taxpayer. John's earnings and withholdings as the manager of a local casino for 2019 are reported on his Form W-2 (see separate tab).

John received Form 1098 from the Reno Bank & Trust (see separate tab).

John's other income includes interest on a savings account at Nevada National Bank of $13,691.

John pays his ex-wife, Sarah McLoughlin, $3,900 per month in accordance with their February 12, 2013 divorce decree. When their 12-year-old child (in the ex-wife's custody) reaches the age of 18, the payments are reduced to $2,800 per month. His ex-wife's Social Security number is 554-44-5555.

In 2019, John purchased a new car and so he kept track of his sales tax receipts during the year. His actual sales tax paid is $3,700, which exceeds the estimated amount per the IRS tables.

John participates in a high-deductible health plan and is eligible to contribute to a health savings account. His HSA earned $75 in 2019.

During the year, John paid the following amounts (all of which can be substantiated):

Credit card interest $1,760 Auto loan interest 4,300 Auto insurance 900 Contribution to IRA 6,000 Property taxes on personal residence 2,700 Contributions to HSA 2,850 Income tax preparation fee 900 Charitable contributions (all cash): Boy Scouts 1,350 St. Matthews Church 3,100 University of Nevada (Reno) Medical School 27,000 Nevada Democratic Party 250 Fund-raising dinner for the Reno Auto Museum 100 (value of dinner is $25)

Required:
Complete John's Form 1040 and Schedules 1, A and B as well Form 8889.

• Make realistic assumptions about any missing data.
• John had health coverage for the entire year and he does not want to contribute to the presidential election campaign,
• Enter all amounts as positive numbers.
• If an amount box does not require an entry or the answer is zero, enter "0".
• If required round any dollar amount to the nearest dollar.

Answer 1

Form 1040

Interest on Saving Bank $13691

Contribution to IRA $6000

Form 8889

HSA Contribution $2850

Being age below 55 $3450