Problem:
John and Georgia are a married couple with 2 dependent sons. Their salaries total $130,000. They have a capital loss of $8000 and tax-exempt interest income of $1000. They paid home mortgage interest of $10000, state income taxes of $4000 and medical expenses of $3000 and they made charitable contributions of $5000.
Required:
Question 1: Compute their AGI
Question 2: Compute their total itemized deductions.
Question 3: What is the amount of their personal exemptions?
Question 4: Compute their taxable income (Tax year is 2013)
Note: Please show how you came up with the solution.