Martin and Maggie are married and have one dependent child, Merry. Merry is 22 years old and currently in

college at State University. Martin works as a design engineer for a manufacturing firm while Maggie runs a

craft business from their home. Maggie's craft business consists of making craft items for sale at craft shows

that are held periodically at various locations. Maggie spends considerable time and effort on her craft business

and it has been consistently profitable over the years. Martin and Maggie own a home and pay interest on their

home loan (balance of $220,000) and a personal loan to pay for Merry's college expenses (balance of $35,000).

Neither Martin nor Maggie 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 Maggie's income is $945. Maggie had 2.400 of gambling

losses from a girl's weekend in Atlantic City.

Determine the amounts listed below for Martin and Maggie's for the year. Assume that the 2018 rules apply.

Martin and Maggie have summarized the income and expenses they expect to report this year as follows:

Income:

Martin's salary

$ 138,100

Maggie's craft sales

26,400

Interest from certificate of deposit

2,650

Interest from Treasury bond funds

727

Interest from municipal bond funds

1,920

Maggie's gambling winnings

1900

Expenditures:

Federal income tax withheld from Martin's wages

$ 13,700

State income tax withheld from Martin's wages

7,400

Social Security tax withheld from Martin's wages

7,482

City income tax withheld from Martin's wages

1.350

Real estate taxes on residence

8,200

Automobile licenses (based on value)

410

State sales tax paid

2,150

Home mortgage interest

15,250

Interest on Masterdebt credit card

2,980

Penalty for early withdrawal of certificate of deposit

900

Cost of Maggie's craft supplies

5,560

Postage for mailing crafts

345

Travel and lodging for craft shows

3,230

Meals during craft shows

670

Self-employment tax on Maggie's craft income

1,890

Interest on loans to pay Merry's tuition

3,200

Merry's room and board at college

15,620

Merry's tuition at college

19,560

Cash contributions to Red Cross

1,225

PLEASE HELP

QUESTION 1 (continued) Gross Income FOR AGI deductions AGI FROM AGI deductions Taxable Income Tax Liability Prepayments Credits Amount Due or Refund Item Treatment Why