Ward and June are married and file a joint Federal income tax return every year. Ward is age 67 and June is age 63. Both received social security benefits for the year as follows: Ward received benefits of $6,000 and June received benefits of $4,000.

Ward retired on August 1 of the current year and will receive his first annuity payment on that date. He worked through July earning $20,000 from his lifelong employer, Mainstreet, Inc. Ward made contributions to the Mainstreet retirement plan, including this year's contribution, totaling $21,000. Ward will receive a pension payment of $1,000 a month (6 payments this year) for the remainder of his lifetime. June has waived any survivorship benefits from the plan and will receive nothing upon Ward's death.

During the current year Mainstreet, Inc. paid health insurance premiums for Ward in the amount of $2,500. Mainstreet also paid life insurance premiums on Ward's life equal to $250 so that Ward could maintain his $50,000 coverage in Mainstreet's group term life program. June has always been the beneficiary of the policy.

Ward and June have been able to accumulate substantial investments. The following investment income was received during the current year:

1)          US Series EE Bond Interest (redeemed
proceeds used to purchase a car) $1,300

2)          Bank Savings Account interest 500

3)          Interest on State of Ohio Bonds 1,000

4)          Dividends from Battleship Mutual Fund 1,200

5)          Capital Gain Distribution from the Battleship Mutual Fund 2,000

6)          Dividends from National Airlines, Inc. 200

Ward won $2,000 in the Ohio lottery during the current year. He can prove by receipt that he lost $800 from all wagering activities during the year. Ward and June's itemized deductions from all sources including the allowable portion of the wagering losses totaled $25,000.

Required: Calculate Ward and June's minimum taxable income assuming they file a Married Joint return (use the simplified method for the pension).  SHOW YOUR WORK!