Bob and Allie Katz are a married couple with three children. Their salaries for 2018 totaled $125,400 with an additional $200 in interest income. They calculated their itemized deductions at $33,700 and also realized a short-term capital gain of $2,600. They sold shares for $13,000 in 2018 that had been purchased in 2015 for $10,000. For the year, Bob and Allie have paid $24,600 in federal taxes. They are also eligible for a $2,000 tax credit. Combined, they contributed $10,000 to their Roth IRAs. 

What is your taxable income?

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To calculate taxable income we start with the total income and make adjustment... View the full answer