Reference no: EM13525963

Tom and Terry are married and have one child, Tammy, age 20, who is completely disabled. Tom is a self-employed handyman. Terry is a full-time caregiver for Tammy.

1. Tom supplies the following information for his business:

Revenue from services $65,000
Materials used for customers, not billed separately 20,000
Work related conference registration fees 1,500
Travel to conferences 1,250
Hotels at conferences 420
Meals at conferences 190
Accounting fees paid 1,200
Internet connection fees 1,850
Legal fees 625
Office supplies 240
Medical insurance premiums 4,000

2. Both Tom and Terry contributed the maximum amounts to their IRAs.
3. They paid $4,000 for a part-time caregiver to help care for Tammy.
Calculate the taxable income for Tom and Terry. Then calculate the tax due - be sure to include the self-employment tax for Tom. Show and label all of your work for partial credit.