Question

Alice J. and Bruce M. Byrd are married taxpayers who file ajoint return. Their Social
Security numbers are 123-45-6789 and 111-11-1111, respectively.Alice�s birthday is Sep-
tember 21, 1966, and Bruce�s is June 27, 1965. They live at 473Revere Avenue, Lowell,
MA 01850. Alice is the office manager for Lowell Dental Clinic, 433Broad Street, Low-
ell, MA 01850 (employer identification number 98-7654321). Bruce isthe manager of
a Super Burgers fast-food outlet owned and operated by PlymouthCorporation, 1247
Central Avenue, Hauppauge, NY 11788 (employer identification number11-1111111).
The following information is shown on their Wage and Tax Statements(Form W�2)
for 2013.

Description Alice Bruce
1 Wages, tips, other compensation $58,000 $62,100
2 Federal income tax withheld 4,500 6,300
3 Social Security wages 58,000 62,100
4 Social Security tax withheld 3,596 3,850
5 Medicare wages and tips 58,000 62,100
6 Medicare tax withheld 841 900
15 State Massachusetts Massachusetts
16 State wages, tips, etc. 58,000 62,100
17 State income tax withheld 2,950 3,100

The Byrds provide over half of the support of their twochildren, Cynthia (born January
25, 1989, Social Security number 123-45-6788) and John (bornFebruary 7, 1993, Social
Security number 123-45-6786). Both children are full-time studentsand live with the
Byrds except when they are away at college. Cynthia earned $4,200from a summer
internship in 2013, and John earned $3,800 from a part-timejob.

During 2013, the Byrds furnished 60% of the total support ofBruce�s widower father,
Sam Byrd (born March 6, 1937, Social Security number 123-45-6787).Sam lived alone
and covered the rest of his support with his Social Securitybenefits. Sam died in Novem-
ber, and Bruce, the beneficiary of a policy on Sam�s life, receivedlife insurance proceeds
of $800,000 on December 28.
The Byrds had the following expenses relating to their personalresidence during
2013:

Property taxes $5,000
Qualified interest on home mortgage 8,800
Repairs to roof 5,750
Utilities 4,100
Fire and theft insurance 1,900
The following facts relate to medical expenses for 2013:
Medical insurance premiums $4,500
Doctor bill for Sam incurred in 2012 and not paid until 20137,600
Operation for Sam 8,500
Prescription medicines for Sam 900
Hospital expenses for Sam 3,500
Reimbursement from insurance company, received in 2013 3,600

The medical expenses for Sam represent most of the 60% thatBruce contributed to-

ward his father�s support.

Other relevant information follows:

� When they filed their 2012 state return in 2013, the Byrdspaid additional state

income tax of $900.

� During 2012, Alice and Bruce attended a dinner dance sponsoredby the Lowell

Police Disability Association (a qualified charitableorganization). The Byrds paid

$300 for the tickets. The cost of comparable entertainment wouldnormally be $50.

� The Byrds contributed $5,000 to Lowell Presbyterian Church andgave used clothing

(cost of $1,200 and fair market value of $350) to the SalvationArmy. All donations

are supported by receipts, and the clothing is in very goodcondition.

� In 2013, the Byrds received interest income of $2,750, whichwas reported on a Form

1099�INT from Second National Bank.

� Alice�s employer requires that all employees wear uniforms towork. During 2012,

Alice spent $450 on new uniforms and $225 on laundrycharges.

� Bruce paid $400 for an annual subscription to the Journal ofFranchise Management.

� Neither Alice�s nor Bruce�s employer reimburses for employeeexpenses.

� The Byrds do not keep the receipts for the sales taxes theypaid and had no major

purchases subject to sales tax.

� Alice and Bruce paid no estimated Federal income tax. NeitherAlice nor Bruce

wants to designate $3 to the Presidential Election CampaignFund.

QUESTION:

Part 1�Tax Computation
Compute net tax payable or refund due for Alice and Bruce Byrd for2013. If they have
overpaid, they want the amount to be refunded to them. If you usetax forms for your
computations, you will need Forms 1040 and 2106 and Schedules A andB.