Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

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. Jessie's 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 Lizzie's 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 Jessie's income is $844. Joe and Jessie have summarized the income and expenses they expect to report this year as follows: Income: Joe's salary $ 135,400 Jessie's craft sales 18,530 Interest from certificate of deposit 1,780 Interest from Treasury bond funds 742 Interest from municipal bond funds 946 Expenditures: Federal income tax withheld from Joe's wages $ 13,700 State income tax withheld from Joe's wages 6,660 Social Security tax withheld from Joe's wages 7,534 Real estate taxes on residence 6,460 Automobile licenses (based on weight) 336 State sales tax paid 1,280 Home mortgage interest 17,300 Interest on Masterdebt credit card 2,560 Medical expenses (unreimbursed) 1,820 Joe's employee expenses (unreimbursed) 2,660 Cost of Jessie's craft supplies 5,690 Postage for mailing crafts 158 Travel and lodging for craft shows 2,360 Self-employment tax on Jessie's craft income 1,688 College tuition paid for Lizzie 6,040 Interest on loans to pay Lizzie's tuition 3,460 Lizzie's room and board at college 12,880 Cash contributions to the Red Cross 590 a. Determine Joe and Jessie's AGI and taxable income for the year. Note: Round your intermediate calculations to the nearest whole dollar amount

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Cost Accounting A Managerial Emphasis

Authors: Charles T Horngren

5th Edition

0131796712, 978-0131796713

More Books

Students also viewed these Accounting questions

Question

As a nurse manager, what would you do to reduce absenteeism?

Answered: 1 week ago

Question

Contrast intelligence and emotional intelligence.

Answered: 1 week ago

Question

Briefly describe four guides to ethical decision-making

Answered: 1 week ago