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Scenario: The First$-$Time Homebuyer Exception

Sarah and Michael, ages $30$ and $32,$ are saving to buy their first home. They each have Traditional IRAs and decide to use the first$-$time homebuyer exception.

Sarah takes a distribution of $$10,000$ from her IRA.

Michael takes a distribution of $$8,000$ from his IRA.

Combined Wages: $$120,000$

Interest and Dividend Income: $$1,500$

Itemized Deductions: $$24,000$

Allowable deduction for self$-$employment tax: None

Questions

Is there a lifetime limit on how much they can utilize this exception?

How does the 'first$-$time homebuyer' status get defined for this exception?

Calculate their combined AGI, Taxable Income, and Total Tax Liability $($assuming they meet the exception requirements$).$