Joe and Jessie are married and have one dependent child, Lizzie


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). Neither Joe nor Jessie is blind or over age 65, and they plan to file as married joint. Assume that the employer portion of the self-employment tax on Jessie’s income is $831. Joe and Jessie have summarized the income and expenses they expect to report this year as follows:

                              Joe’s salary                                                            $ 129,100
                              Jessie’s craft sales                                                        18,400
                              Interest from certificate of deposit                                1,650
                              Interest from Treasury bond funds                                   716
                              Interest from municipal bond funds                                 920
                              Federal income tax withheld from Joe’s wages     $   13,700
                              State income tax withheld from Joe’s wages                6,400
                              Social Security tax withheld from Joe’s wages             7,482
                              Real estate taxes on residence                                       6,200
                              Automobile licenses (based on weight)                            310
                              State sales tax paid                                                         1,150
                              Home mortgage interest                                              14,000
                              Interest on Master debt credit card                                 2,300
                              Medical expenses (unreimbursed)                                 1,690
                              Joe’s employee expenses (unreimbursed)                     2,400
                              Cost of Jessie’s craft supplies                                        4,260
                              Postage for mailing crafts                                                 145
                              Travel and lodging for craft shows                                2,230
                              Self-employment tax on Jessie’s craft income              1,662
                              College tuition paid for Lizzie                                       5,780
                              Interest on loans to pay Lizzie’s tuition                        3,200
                              Lizzie’s room and board at college                             12,620
                              Cash contributions to Red Cross                                      525

Complete the attached Excel tax formula worksheet

Filing Status


Gross Income: (List income items below) (4)

Total Income

Adjustments for AGI: (List deductions below) (2)

Charitable Contribution (only if SD) (1)

Adjusted Gross Income (AGI)

Deductions from AGI: (List items below) 1)

Itemized Deductions (show your work)


Standard Deduction (1)

Qualified Business Deduction

Taxable Income

Taxes Due or Refund

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