Marc and Michelle are married and earned salaries this year of $70,000 and $14,250, respectively. In addition to their salaries, they received interest of $350 from municipal bonds and $1,250 from corporate bonds. Marc contributed $3,250 to an individual retirement account, and Marc paid alimony to a prior spouse in the amount of $2,250. Marc and Michelle have a 10-year-old son, Matthew, who lived with them throughout the entire year. Thus, Marc and Michelle are allowed to claim a $2,000 child tax credit for Matthew. Marc and Michelle paid $7,500 of expenditures that qualify as itemized deductions and they had a total of $6,655 in federal income taxes withheld from their paychecks during the course of the year. (Use the tax rate schedules.)

a. What is Marc and Michelles gross income?

b. What is Marc and Michelles adjusted gross income?

c. What is the total amount of Marc and Michelles deductions from AGI?

d. What is Marc and Michelles taxable income? (Filing Jointly, Standard Deduction is $24,000)

e. What is Marc and Michelles taxes payable or refund due for the year?

2018 Tax Rate Schedule Schedule X-Single Schedule Z Head of Household If taxable income is over: If taxable income is over: But not But not over: The tax is: over: The tax is: So 9,525 10% of taxable income $0 $13,600 $51,800 $82,500 $157,500 10% of taxable income $952.50 plus 12% of the excess over $9,525 $9,525 $38,700 $38,700 82,500 $82,500 $157,500 $14,089.50 plus 24% of the excess over $82,500 157,500 $200,000 $32,089.50plus 32% of the excess over $157,500 $200,000 $500,000 $45,689.50 plus 35% of the excess over $200,000 $500,000 $13,600 $51,800 $82,500 $157,500 $200,000 $500,000 $ 1,360 plus 12% of the excess over $13,600 $5,944 plus 22% of the excess over $51,800 $12,698 plus 24% of the excess over $82,500 $30,698 plus 32% of the excess over $157,500 $44,298 plus 35% of the excess over $200,000 $149,298 plus 37% of the excess over $500,000 $4,453.50 plus 22% of the excess over $38,700 $200,000 $500,000 $150,689.50 plus 37% of the excess over $500,000 Schedule Y-1 Married Filing Jointly of Qualifying Widow(er) If taxable income is But not Schedule Y-2 Married Filing Separately If taxable income is over: But not over: over: The tax is: over: The tax is: $19,050 $19,050 77,400 $77,400 $165,000 $165,000 $315,000 $315,000 $400,000 $400,000 $600,000 600,000 10% of taxable income $1,905 plus 12% of the excess over $19,050 $8,907 plus 22% of the excess over $77,400 $28,179plus 24% of the excess over $165,000 $64,179 plus 32% of the excess over $315,000 $91,379 plus 35% of the excess over $400,000 $161,379 plus 37% of the excess over $600,000 9,525 $38,700 $82,500 $157,500 $200,000 $300,000 10% of taxable income $952.50 plus 12% of the excess over $9,525 $4,453.50 plus 22% of the excess over $38,700 $14,089.50 plus 24% of the excess over $82,500 $32,089.5plus 32% of the excess over $157,500 $45,689.50 plus 35% of the excess over $200,000 $80,689.50 plus 37% of the excess over $300,000 $9,525 $38,700 $82,500 $157,500 $200,000 300,000