1. P and J are a married couple with the following items of income for 2014:
P wages $45,000
State tax refunds $5,000
J unemployment $2,750
Dividends $400
Interest income $350
J Social Security $18,000
P is a flight attendant who occasionally takes advantage of the airline's "friends and family" benefits where P and J can fly for free on certain flights at certain times. The only restriction on the use of the flights by P and J is that the flight cannot be full, otherwise, they can fly anywhere in the world. P and J took flights costing $4,000 during the year when compared to regular passenger costs. A review of their 2013 tax return shows they deducted $1,200 of state income taxes on their federal return.
P and J also have the following deductions:
Interest on home mortgage $5,000
State income taxes $2,500
State sales taxes $1,000
Property taxes $1,500
Charitable contributions $300
Contributions to congressman $400
Airline uniform costs $300
Calculate P and J's 2014 Adjusted Gross Income (AGI) as well as their taxable income. Presume that their personal exemptions total $7,000 and they will file a married filing joint tax return. If you are excluding any of the above items from either income or deductions P and J are a married couple with the following items of income for 2014:
P wages $45,000
State tax refunds $5,000
J unemployment $2,750
Dividends $400
Interest income $350
J Social Security $18,000