Nick and David are married and have two dependent children, Michelle $($age $18)$ and Robert $($age $10).$ Michelle is currently in college at State University. Nick works as an accountant for a construction company while David is self$-$employed as an interior designer and manages his business from their home. Neither Nick nor David is blind or over age $65,$ and they plan to file jointly. Nick and David are entitled to claim a child tax credit in the amount of $$2,500$ for the two children.

Using the standard format for the Individual Income Tax Formula, determine Nick and David$$s gross income, AGI, taxable income, tax liability, and final income tax due$/$refund for the current year. For each income item in the list, please note whether the item is included or excluded from gross income on the "Homework Calculations" tab which contains your supporting calculations. For each expenditure, please note whether the item is $($a$)$ deductible as a $$for AGI$$ deduction, $($b$)$ deductible as a $$from AGI$$ deduction, or $($c$)$ not deductible on the "Homework Calculations" tab which contains your supporting calculations. Nick and David have provided the following information:

Income:

Nick's salary $94,000$

David's interior design business income $($sole proprietor$)12,000$

Expenditures:

Federal income tax withheld from Nick$$s wages $9,200$

State income tax withheld from Nick$$s wages $4,500$

Social Sec. & Medicare tax withheld from Nick$$s wages $7,191$

Real estate tax on residence $7,400$

State sales tax paid $2,700$

Home mortgage interest $12,750$

Interest on personal credit card $2,000$

Medical expenses $($unreimbursed$)4,300$

Gambling losses $2,800$

David$$s business expenses $($sole proprietor$)5,500$

Self$-$employment tax on David$$s income $1,696$

Cash contribution to the American Red Cross Disaster Relief $500$

Michelle$$s room and board at college $13,000$

Interest on loans to pay Michelle$$s tuition $2,900$

Contribution to Roth IRA account $5,100$

Stock contribution to youth charity $($basis$=3,000)8,000***($FMV$)$; Owned for $5$ years