Jenny and Mike are married and earned salaries this year of $72,800 and $15,300, respectively. In addition to their salaries, they received interest of $350 from municipal bonds and $1,600 from corporate bonds. Jenny contributed $3,600 to an individual retirement account, and Jenny paid alimony to a prior spouse in the amount of $2,600 (under a divorce decree effective June 1, 2005). Jenny and Mike have a 10-year-old son, Daniel, who lived with them throughout the entire year. Thus, Jenny and Mike are allowed to claim a $2,000 child tax credit for Daniel. Jenny and Mike paid $8,200 of expenditures that qualify as itemized deductions and they had a total of $6,955 in federal income taxes withheld from their paychecks during the year. (Use the tax rate schedules.)

1. What is Jenny and Mike's gross income

2. What is Jenny and Mike's adjusted gross income

3. What is the total amount of Jenny and Mike's deductions from AGI?

4. What is Jenny and Mikes taxable income?

5. What is Jenny and Mikes taxes payable or refund due for the year?

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 $622,050