Lorenzo and Laura Financial Analysis Case Discussion
Lorenzo and Laura are married and have one child, Lorena, who is 19 and lived at home all year. Lorena is currently working at EP Fitness and earned $7,800 from personal training. She is currently not attending school, but may start at UTEP next year. The Lopez’s also support Lorenzo’s father, Jesus who lives in a small apartment down the street. Jesus earned $3,500 this year from Leo’s Restaurant and Lorenzo pays most of his bills (food, rent, etc.) for $2,000 per month.
Lorenzo works as a medical technician for the Internal Medicine, Inc (see W-2 information). Lorenzo also won $4,250 in a tennis tournament at Tennis West. Laura is a nurse practitioner and works at Canutillo Urgent Care (see W-2 information).
She was unemployed earlier in the year and received $3,927 of unemployment compensation. Lorenzo and Laura own their home and pay interest (see next page) on their home loan (balance of $325,000, original loan was on 1/12/2016 for $387,000) and a personal loan to pay for two cars they own for $56,000. Lorenzo and Laura want to file either married filing jointly or married filing separately, whichever is best for tax purposes. Based on this information and the information below, prepare Lorenzo and Laura’s 2019 Federal tax return.
The Lopez’s do not want to contribute to the presidential election campaign.
- The Lopez’s live at 2323 Valley Acres Ave, El Paso, TX 79922
- Lorenzo’s birthday is 9/22/1975 and his Social Security number is 542-11-3119
- Laura’s birthday is 11/14/1979 and her Social Security number is 553-23-7447
- Lorena’s birthday is 2/11/2000 and her Social Security number is 532-98-5131
- Jesus Lopez’s birthday is 3/4/1955 and his Social Security #is 522-14-0071
- The Lopez’s do not have any foreign bank accounts or trusts
- The Lopez’s did not have any transactions with virtual currency
- Do not consider AMT tax for this tax return
- A $500 credit is available for dependents claimed on the tax return over 18 years’ old (Line 13a) The Lopez’s have summarized the income and expenses they expect to report this year as follows:
a). Lorenzo’s W2 Information: Salary $ 70,689 Federal income tax withheld 8,890 State income tax withheld 0 Social Security tax withheld 4,383 Medicare tax withheld 1,025
b). Laura’s W2 Information $ 47,909 Federal income tax withheld 5,900 State income tax withheld 0 Social Security tax withheld 2,970 Medicare tax withheld 695
c). Interest income from bank account at Bank of America 1,560 Ordinary Dividend income from Hocking Stock 2,775 Tax exempt interest income from Ft Davis City municipal bond funds 987
Expenditures: Sales taxes paid in 2019 (Lorenzo keeps receipts) 1,290 Real estate taxes paid on residence 9,504 Automobile (personal property) license tax (based on value) 540 Home mortgage interest paid 15,862 Interest paid on Discover Credit Card 537 Interest paid on loan for autos 3,575 Medical Expenses (unreimbursed) 9,086 Laura’s Medical Prescriptions 1,565 Lorena’s gym membership 1,029 Tax Preparation fees 1,750 Cash contributions to Mayor Margo election campaign 1,150 Cash contributions to the Rescue Mission (Lorenzo has receipts) 2,675
Please complete Form 1040, Schedule 1, possibly Schedule A (you need to determine if schedule A is needed – are your allowed itemized deductions greater than the standard deduction), and Schedule B.