Demarco and Janine Jackson have been married for 20 years and have four children who qualify as their dependents (Damarcus, Janine Jr., Michael, and Candice).The couple received salary income of $103,000 and qualified business income of $17,500from an investment in a partnership, and they sold their home this year. They initially purchased the home three years ago for $237,500 and they sold it for $287,500.The gain on the sale qualified for the exclusion from the sale of a principal residence.The Jacksons incurred $18,000 of itemized deductions, and they had $3,800 withheld from their paychecks for federal taxes. They are also allowed to claim a child tax credit for each of their children. However, because Candice is 18 years of age, the Jacksons may claim a child tax credit for other qualifying dependents for Candice.The Jacksons are also allowed to claim a $2,400 recovery rebate credit for themselves and a $500 credit for each of their three youngest children. Assume they did not receive the rebate credit in advance. (Use the tax rate schedule below).

Schedule Y-1-Married Filing Jointly or Qualifying Widow(er) If taxable income is over: But not over: The tax is: 0 $ 19,750 10% of taxable income $ 19,750 $ 80,250 $1,975 plus 12% of the excess over $19,750 $ 80.250 $171,050 $9,235 plus 22% of the excess over $80,250 $171,050 $326,600 $29,211 plus 24% of the excess over $171,050 $326,600 $414,700 $66,543 plus 32% of the excess over $326,600 $414,700 $622,050 $94,735 plus 35% of the excess over $414,700 $622,050 $167,307.50 plus 37% of the excess over $622,050Description Amount (1) Gross income $ 120,500 (2) For AGI deductions 0 (3) Adjusted gross income $ 120,500 (4) Standard deduction 24,800 (5) Itemized deductions 18,000 (6) Greater of standard deductions or itemized deductions 24,800 (7) Deduction for qualified business income 3,500 (8) Total deductions from AGI 28,300 (9) Taxable income 92,200 (10) Income tax liability 11,864 (11) Other taxes $ 0 (12) Total tax $ 11,864 (13) Credits (14) Prepayments 3,800 Tax due with tax return