Description Joe and Jessie are married and have one dependent child, Lizzie. Lizzie is currently in ...

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Description 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 $666. Joe and Jessie have summarized the income and expenses they expect to report this year as follows: Income: Joe's salary $ 146,200 Jessie's craft sales 18,610 Interest from certificate of deposit 1,860 Interest from Treasury bond funds 758 Interest from municipal bond funds 962 Expenditures: Federal income tax withheld from Joe's wages $ 13,700 State income tax withheld from Joe's wages 6,820 Social Security tax withheld from Joe's wages 7,566 Real estate taxes on residence 6,620 Automobile licenses (based on weight) 352 State sales tax paid 1,360 Home mortgage interest 28,100 Interest on Masterdebt credit card 2,720 Medical expenses (unreimbursed) 1,900 Joe's employee expenses (unreimbursed) 2,820 Cost of Jessie's craft supplies 6,570 Postage for mailing crafts 170 Travel and lodging for craft shows 2,440 Self-employment tax on Jessie's craft income 1,332 College tuition paid for Lizzie 6,200 Interest on loans to pay Lizzie's tuition 3,620 Lizzie's room and board at college 13,040 Cash contributions to the Red Cross 630 a. Determine Joe and Jessie's AGI and taxable income for the year.