Joe and Jessie are married and have one dependent child, Lizzie. Lizzie is currently in college at State University. Joe works as a design engineer for a manufacturing firm while Jessie runs a craft business from their home. Jessies craft business consists of making craft items for sale at craft shows that are held periodically at various locations. Jessie spends considerable time and effort on her craft business, and it has been consistently profitable over the years. Joe and Jessie own a home and pay interest on their home loan (balance of $220,000) and a personal loan to pay for Lizzies college expenses (balance of $35,000). Neither Joe nor Jessie is blind or over age 65, and they plan to file as married-joint. Assume that the employer portion of the self-employment tax on Jessies income is $856. Joe and Jessie have summarized the income and expenses they expect to report this year as follows:

Income:
Joes salary	$ 131,600
Jessies craft sales	18,650
Interest from certificate of deposit	1,900
Interest from Treasury bond funds	766
Interest from municipal bond funds	970
Expenditures:
Federal income tax withheld from Joes wages	$ 13,700
State income tax withheld from Joes wages	6,900
Social Security tax withheld from Joes wages	7,582
Real estate taxes on residence	6,700
Automobile licenses (based on weight)	360
State sales tax paid	1,400
Home mortgage interest	18,500
Interest on Masterdebt credit card	2,800
Medical expenses (unreimbursed)	1,940
Joes employee expenses (unreimbursed)	2,900
Cost of Jessies craft supplies	7,010
Postage for mailing crafts	170
Travel and lodging for craft shows	2,480
Self-employment tax on Jessies craft income	1,712
College tuition paid for Lizzie	6,280
Interest on loans to pay Lizzies tuition	3,700
Lizzies room and board at college	13,120
Cash contributions to the Red Cross	650