Tim and Sarah Lawrence are married and file a joint return. Tim's Social Security number is 123-45-6789, and Sarah's Social Security number is 111-11-1112. They reside at 100 Olive Lane, Covington, LA 70434. They have two dependent children, Sean and Debra, ages 12 and 16, respectively. Sean's Social Security number is 123-45-6788, and Debra's Social Security number is 123-45-6787.
Tim is self-employed as the sole proprietor of an unincorporated business, and Sarah is a corporate executive. Tim reports the following 2016 income and expenses from his business.
Gross income .............................................................................$325,000
Business expenses ........................................................................201,000
Sarah was covered for the entire year by her employer's health insurance policy.
Other records related to Sarah's employment provide the following information.
Salary ........................................................................................$145,000
Unreimbursed travel expenses (including $200 of meals) ................................1,100
Unreimbursed entertainment expenses .........................................................500
Other pertinent 2016 information follows.
Proceeds from sale of stock acquired on July 15, 2016
(cost of $12,000), and sold on August 1, 2016 ...........................................$ 9,800
Proceeds from sale of stock acquired on September 18, 2015 (cost of $5,000),
and sold on October 5, 2016 ..................................................................3,800
Wages paid to full-time domestic worker for housekeeping and child supervision...10,000
Interest income received ......................................................................7,000
Total itemized deductions (not including any potential deductions above) ..........27,900
Federal income tax withheld ................................................................31,850
Estimated payments, Federal income tax ..................................................34,000
Compute the 2016 net tax payable or refund due for Tim and Sarah Lawrence.