Robert M. and Jane R. Brewster live at 1802 College Avenue, Carmel, IN 46032. Robert is age 48, and Jane is age 37. They are married and file a joint return for 2012. The Brewsters have two dependent children, Ellen J. and Sean M., who are 10-year-old twins. Ellen's Social Security number is 123-45-6788, and Sean's is 123-45-6787. Robert pays child support of $15,000 for Amy, his 17-year-old daughter from his previous marriage. Amy's Social Security number is 123-45-6786. According to the divorce decree, Margaret, Robert's former wife, has legal custody of Amy. Margaret provides the balance of Amy's support (about $6,000).

Robert (111-11-1111) is a factory supervisor, and Jane (123-45-6789) is a computer systems analyst. The Brewsters' Forms W-2 reflect the following information.

Robert Jane

Salary (Indiana Foundry, Inc.).................$95,000

Salary (Carmel Computer Associates)...............................$103,000

Federal income tax withheld.....................24,750................27,000

State income tax withheld........................5,000..................5,400

In addition to their salaries, the Brewsters report the following income items.

Interest income (Carmel Sanitation District Bonds).................$19,500

Interest income (Carmel National Bank) ................................4,600

Qualified dividend income (Able Computer Corporation) .........15,000

Gambling income............................................................6,500

Gift from Uncle Raymond to Robert...................................27,000

Jane inherited $900,000 from her grandfather in January and invested the money in the Carmel Sanitation District Bonds, which are 2008 private activity bonds. Jane was selected as the Carmel "Citizen of the Year" and received an award of $7,500. She used the $7,500 to pay off some credit card debt.

The Brewsters incurred the following expenses.

Medical expenses (physician, hospital bills).................................$23,900

Real property tax on personal residence.........................................8,100

Mortgage interest on personal residence (reported on Form 1098)..........9,400

Investment interest expense. ......................................................3,500

Contributions.......................................................................15,500

Gambling losses.....................................................................6,800

Sales taxes (from sales tax table) ................................................1,851

On March 1, Robert and Jane contributed Ace stock to the Carmel Salvation Army, a public charity. They had acquired the stock on February 9, 2001, for $6,500. The stock was listed on the New York Stock Exchange at a value of $12,000 on the date of the contribution. In addition, Robert and Jane contributed $3,500 during the year to Second Church.

Robert sold five acres of land to a real estate developer on October 12, 2013, for $100,000. He had acquired the land on May 15, 2008, for $86,000.

Compute the 2013 tax liability (including AMT, if any) for the Brewsters. Write a letter to the Brewsters indicating whether they have a Federal income tax refund or balance due, and suggest possible tax planning strategies for future years.