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Chapter 3 Financial Planning Exercise 5 Calculating taxable income for a married couple filing jointly Freya and Sebastian Hunter are married and have one child.

Chapter 3 Financial Planning Exercise 5 Calculating taxable income for a married couple filing jointly

Freya and Sebastian Hunter are married and have one child. Sebastian is putting together some figures so he can prepare the Hunters' joint 2018 tax return. So far, hes been able to determine the following concerning income and possible deductions:

Total unreimbursed medical expenses incurred $1,150
Gross wages and commissions earned 50,840
IRA contribution 5,000
Mortgage interest paid 5,300
Capital gains realized on assets held less than 12 months 1,500
Income from limited partnership 250
Interest paid on credit cards 380
Qualified dividend income earned 610
Sales taxes paid 2,470
Charitable contributions made 1,200
Capital losses realized 3,475
Interest paid on a car loan 570
Social Security taxes paid 2,700
Property taxes paid 700
State income taxes paid 1,800

Given this information, determine the amount of the available itemized deductions. How much taxable income will the Hunters have in 2018? (Note: Assume that Sebastian is not covered by a pension plan where he works, his child qualifies for the child tax credit, and the standard deduction of $24,000 for married filing jointly applies.) Do not round your intermediate computations.

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