Demarco and Janine Jackson have been married for 20 years and have four children who qualify as
Question:
Demarco and Janine Jackson have been married for 20 years and have four children who qualify as their dependents (Damarcus, Jasmine, Michael, and Candice). The Jacksons file a joint tax return. The couple received salary income of $96,000 and qualified business income of $19,000 from an investment in a partnership, and they sold their home this year.
They initially purchased the home three years ago for $245,000 and they sold it for $295,000. The gain on the sale qualified for the exclusion from the sale of a principal residence. The Jacksons incurred $18,300 of itemized deductions, and they had $4,000 withheld from their paychecks for federal taxes. They are also allowed to claim a child tax credit for each of their children. However, because Candice was 18 years of age at year end, the Jacksons may claim a child tax credit for other qualifying dependents for Candice. (Use the tax rate schedules.)
a. What is the Jacksons' taxable income, and what is their tax liability or (refund)?