The following couple came to you for assistance with preparing their tax return for 2017 and they want to understand how the new tax law will impact their 2018 taxes.

The reason for each tax decision you make must have a brief, pertinent tax explanation not just a number.

1.Joe and Rose Miller both work and they have two children, John, 20, who goes to college full time and does bartending on the weekend so save up and buy a car. He earned $6,000 in 2017. Darlene is 17 and a senior in high school and only babysits occasionally, mostly for free.

2. Joes Gross W-2 is $125,000, he has Federal withholding of $16,000, NJ withholding of $3,000. His employer pays for a high deductible plan and contributes $6,000 to Joes family HSA account. On the W-2, it shows that Joe contributed $5,000 to his 401(k) plan.

3. Joe has a side job where he does yard work during the spring, summer and fall. He earned $25,000 and his tools cost $600, his truck that he only uses for yard work, was purchased in September 2016 and cost him $32,000. The gas, tolls, insurance and oil changes cost $6,000 in 2017. Joes assistant, Fred, was paid $9,000 in 2017. Joe provided the projects, tasks and time frame for Fred on a daily basis.

4. Rose is a part-time school substitute teacher and occasional lunchroom monitor. She earned $18,000 in 2017 and spent $100 on special treats to give the children when she substituted.

5. Joe and Rose own their home and pay $8,000 in real estate taxes and $6,000 in interest. Their medical co-pays were $1300 since John had had some physical therapy as a result of a wrist injury playing basketball. The Millers other medical payments were $650.

6. The Millers own a beach cottage at the NJ seashore that they mainly rent out for 3 months of the year, June through August for $7200. They spent two weeks in September at the cottage for their vacation.

7. The Millers sold 200 shares of B & A stock that they purchased for $1200 in 2010 for $1860.

8. They invested in a start-up company called Newbie, as the first investors for $10,000 each in 2016 but the company folded in 2017.

9. They donated 50 shares of Apple stock to Monmouth University that cost them $1,000 and that was worth $6,500 when they donated it on September 15, 2017. They earn interest each year on their NJ Turnpike bonds of $600.

10. Joe loaned his sister-in-law, Svetlana, $50,000 to help her open her own dental practice in 2007. Svetlana signed a note that she would repay the loan in monthly installments with 1% interest over a 10 year period. She did not payback any of the loan nor the interest as she just never had the extra cash. The dental practice just covered the bills and her modest salary. Joe did not go to a collection agency because he knew she didnt have the money to repay the loan.

11. What are the Millers tax liability for 2017? (You do not need need to calculate the tax or to prepare a tax return).

12. The topics covered include: exemptions/dependents, filing status, standard vs. itemized deductions, income includible or excludible, business income and expenses, adjustments to arrive at AGI, capital gains and losses, nonbusiness bad debts, etc.