Determine joe and jessies agi and taxable income for year

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Problem

Joe and Jessie are married and have one dependent child, Lizzie. Lizzie is currently in college at State University. Joe works as a design engineer for a manufacturing firm, while Jessie runs a craft business from their home. Jessie's craft business consists of making craft items for sale at craft shows that are held periodically at various locations. Jessie spends considerable time and effort on her craft business, and it has been consistently profitable over the years. Joe and Jessie own a home and pay interest on their home loan (balance of $220,000) and a personal loan to pay for Lizzie's college expenses (balance of $35,000). Get the instant assignment help.

Neither Joe nor Jessie is blind or over age 65, and they plan to file married filing jointly. Assume that the employer portion of the self-employment tax on Jessie's income is $745. Joe and Jessie have summarized the income and expenses they expect to report this year as follows:

Income:
Joe's salary $ 160,200
Jessie's craft sales 18,510
Interest from certificate of deposit 1,760
Interest from Treasury bond funds 738
Interest from municipal bond funds 942
Expenditures:
Federal income tax withheld from Joe's wages $ 13,700
State income tax withheld from Joe's wages 6,620
Social Security tax withheld from Joe's wages 7,526
Real estate taxes on residence 6,420
Automobile licenses (based on weight) 332
State sales tax paid 1,260
Home mortgage interest 27,100
Interest on Masterdebt credit card 2,520
Medical expenses (unreimbursed) 1,800
Joe's employee expenses (unreimbursed) 2,620
Cost of Jessie's craft supplies 5,470
Postage for mailing crafts 156
Travel and lodging for craft shows 2,340
Self-employment tax on Jessie's craft income 1,490
College tuition paid for Lizzie 6,000
Interest on loans to pay Lizzie's tuition 3,420
Lizzie's room and board at college 12,840
Cash contributions to the Red Cross 580

Task

Determine Joe and Jessie's AGI and taxable income for the year.

Reference no: EM133927381

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