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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. Sebastian is putting together some figures so he can prepare the Hunters' joint 2018 tax return. So far, he's been able to determine the following concerning income and possible deductions:

Total unreimbursed medical expenses incurred$1,160Gross wages and commissions earned50,700IRA contribution5,000Mortgage interest paid5,100Capital gains realized on assets held less than 12 months1,450Income from limited partnership250Interest paid on credit cards360Qualified dividend income earned620Sales taxes paid2,450Charitable contributions made1,200Capital losses realized3,475Interest paid on a car loan570Social Security taxes paid2,800Property taxes paid750State income taxes paid1,800

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.