Question 5(4 points)

Several years have gone by since Harry and Belinda graduated from college and started their working careers. They believe that they are paying too much in federal income taxes. The Johnsons' total income last year included Harry's salary of $73,000 and Belinda's salary of $94,000. She contributed $3,000 to her 401(k) for retirement. They earned $400 in interest on savings and checking and $3,000 in interest income from the trust which is taxed in the same way as interest income from checking and savings accounts. Harry contributed $3,000 into a traditional IRA. Show your work as you answer the following questions:

1. List three additional ways that the Johnsons might reduce their tax liability next year.