John and Sandy Ferguson got married 20 years ago and have a daughter, Samantha.

Posted: October 28th, 2023

John and Sandy Ferguson got married 20 years ago and have a daughter, Samantha. John retired from his previous employer last year. He received retirement benefits on Form 1099-R. During 2022, John started his own business as a web designer and earned revenue of $140,000 from various clients. He had expenses associated with his business (see detail below). Sandy worked part-time as a receptionist for a law firm (refer to Form W-2 for detailed information on her wages and withholding). They received qualified dividends, interest income, tax-exempt interest, and sold investments. Refer to the client source documentation regarding the various Form 1099s for interest, dividends, and capital transactions along with retirement distributions and mortgage interest payments.
General Taxpayer Information:
The Fergusons live at 3300 W. Camelback Lane, Las Vegas, NM 87701.
For their home phone number, enter 602.639.2222
Indicate “not applicable” for the taxpayer social security numbers for John and Sandy. John’s birthday is 7/16/78 and Sandy’s birthday is 10/6/1977. Samantha’s social security number is 678-99-1234. Samantha was born on February 5, 2009.
Enter John’s occupation as Entrepreneur and Sandy’s as Receptionist.
If there is an overpayment, the Fergusons would like it applied to next year.
The Fergusons Reported Making the Following Payments During the Year:
Federal estimated tax payments of $6,250 each on 4/15/22, 6/15/22, 9/15/22, and 1/15/23.
State estimated tax payments of $4,400 ($1,100 each on the same dates as the federal estimated payments). Hint: For Schedule A, only the amount paid during 2022 will be reported as a current year deduction. Assume no estimated state tax payments for 2021 were made on 1/15/22.
Mortgage interest (see Form 1098). The acquisition debt on their home was originally $700,000. They paid $4,560 of real estate taxes on their principal residence. They did not have any home equity lines of credit outstanding during 2022.
Sandy paid and was reimbursed $800 for employee business expenses. She was required to provide documentation for her expenses to her employer.
The investment expenses reported on Form 1099-DIV is 100% investment interest expense.
Credit card interest of $2,245 was paid during the year.
Cash/Check of $10,000 was contributed to various qualified public charities.
Used furniture was donated to Goodwill with a fair market value of $400 and an original cost of $2,000. Tip: The furniture qualifies as 50% property.
Health insurance of $12,000 was paid. Since Sandy only works part-time, she does not qualify for health insurance through her employer. They had no other medical expenses during the year.
They own a rental home located at 1342 S. 29th Avenue, Santa Fe, NM 87505. The rental home was purchased on July 3, 2016, for $420,000. Hint: Remember to calculate depreciation on the rental property. The Fergusons hired a management company to handle all matters associated with the rental property. As such, the Fergusons did not materially participate in the management of their rental property. They do not have any other passive activities. During the year they received $19,000 of rental income from their tenants for annual rent. They incurred the following expenses associated with the home:
Mortgage interest of $7,140
Real estate taxes of $2,321
Insurance of $1,453
Management fees of $1,200
Repairs of $674