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 $840. Joe and Jessie have summarized the income and expenses they expect to report this year as follows:

Income: Joe's salary$ 135,000Jessie's craft sales18,490Interest from certificate of deposit1,740Interest from Treasury bond funds734Interest from municipal bond funds938Expenditures: Federal income tax withheld from Joe's wages$ 13,700State income tax withheld from Joe's wages6,580Social Security tax withheld from Joe's wages7,518Real estate taxes on residence6,380Automobile licenses (based on weight)328State sales tax paid1,240Home mortgage interest16,900Interest on Masterdebt credit card2,480Medical expenses (unreimbursed)1,780Joe's employee expenses (unreimbursed)2,580Cost of Jessie's craft supplies5,250Postage for mailing crafts154Travel and lodging for craft shows2,320Self-employment tax on Jessie's craft income1,680College tuition paid for Lizzie5,960Interest on loans to pay Lizzie's tuition3,380Lizzie's room and board at college12,800Cash contributions to the Red Cross570

Comprehensive Problem 7-46 Part-a (Algo)

a. Determine Joe and Jessie's AGI and taxable income for the year.

Note: Round your intermediate calculations to the nearest whole dollar amount.