Jake and Penny are married, file jointly, and have one dependent (12-year old qualifying child). receives a salary. is self-employed. Her sole proprietorship's revenues are , and its expenses are . and each make a deductible contribution to a traditional IRA. Their itemized deductions are . Federal income taxes of are withheld from 's paychecks, and makes of estimated tax payments.

STANDARD DEDUCTION Filing Status Married individuals filing joint returns and surviving spouses $ 24,400 Heads of households $ 18,350 Unmarried individuals (other than surviving spouses and heads of households) $ 12,200 Married individuals filing separate returns $ 12,200 Additional standard deduction for the aged and the blind; Individual who is married and surviving spouses $1,300* Additional standard deduction for the aged and the blind; Individual who is unmarried and not a surviving spouse $1,650* Taxpayer claimed as dependent on another taxpayers return: Greater of (1) earned income plus $350 or (2) $1,100. * These amounts are $2,600 and $3,300, respectively, for a taxpayer who is both aged and blind. 2019 Child Tax Credit = $2,000 per qualifying child

Married, Filing Joint and Surviving Spouse If taxable income is: The tax is:

Not over $19,400 . . . . . . . . . . . . . . . . . 10% of taxable income.

Over $19,400 but not over $78,950 . . . . $1,940.00 + 12% of the excess over $19,400.

Over $78,950 but not over $168,400 . . . $9,086.00 + 22% of the excess over $78,950.

Over $168,400 but not over $321,450 . . $28,765.00 + 24% of the excess over $168,400.

Over $321,450 but not over $408,200 . . $65,497.00 + 32% of the excess over $321,450.

Over $408,200 but not over $612,350 . . $93,257.00 + 35% of the excess over $408,200.

Over $612,350 . . . . . . . . . . . . . . . . . . . $164,709.50 + 37% of the excess over $612,350.

Requirement: Determine the additional tax due or refund when Jake and Penny file their 2019

income tax return. Ignore any self-employment tax.

I need help computing their taxable income. Thank you.

First, compute their gross income. Jake's salary $ 91,000 Penny's gross income 97.000 Gross income $ 188,000 Next, compute their adjusted gross income. Gross income $ 188,000 Minus: Business expenses (44,000) Minus: IRA contributions (12,000) $ 132.000 Adjusted gross income Next, compute their taxable income. (Assume that Penny qualifies for the qualified business income deduction) Adjusted gross income 132.000 Minus: Itemized deductions (29,500) Minus: Qualified business income deduction Taxable income First, compute their gross income. Jake's salary $ 91,000 Penny's gross income 97.000 Gross income $ 188,000 Next, compute their adjusted gross income. Gross income $ 188,000 Minus: Business expenses (44,000) Minus: IRA contributions (12,000) $ 132.000 Adjusted gross income Next, compute their taxable income. (Assume that Penny qualifies for the qualified business income deduction) Adjusted gross income 132.000 Minus: Itemized deductions (29,500) Minus: Qualified business income deduction Taxable income