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Joe and Jessie are married and have one dependent child, Lizzie. Lizzie is currently in college at State University. Joe works as a design engineer for a manufacturing firm, while Jessie runs a craft business from their home. Jessie's craft business consists of making craft items for sale at craft shows that are held periodically at various locations. Jessie spends considerable time and effort on her craft business, and it has been consistently profitable over the years. Joe and Jessie own a home and pay interest on their home loan (balance of $220,000) and a personal loan to pay for Lizzie's college expenses (balance of $35,000).

Neither Joe nor Jessie is blind or over age 65, and they plan to file as married-joint. Assume that the employer portion of the self-employment tax on Jessie's income is $802. Joe and Jessie have summarized the income and expenses they expect to report this year as follows:

Income:
Joe's salary	$ 134,500
Jessie's craft sales	18,440
Interest from certificate of deposit	1,690
Interest from Treasury bond funds	724
Interest from municipal bond funds	928
Expenditures:
Federal income tax withheld from Joe's wages	$ 13,700
State income tax withheld from Joe's wages	6,480
Social Security tax withheld from Joe's wages	7,498
Real estate taxes on residence	6,280
Automobile licenses (based on weight)	318
State sales tax paid	1,190
Home mortgage interest	16,400
Interest on Masterdebt credit card	2,380
Medical expenses (unreimbursed)	1,730
Joe's employee expenses (unreimbursed)	2,480
Cost of Jessie's craft supplies	4,670
Postage for mailing crafts	149
Travel and lodging for craft shows	2,270
Self-employment tax on Jessie's craft income	1,604
College tuition paid for Lizzie	5,860
Interest on loans to pay Lizzie's tuition	3,280
Lizzie's room and board at college	12,700
Cash contributions to the Red Cross	545

Determine Joe and Jessie's AGI and taxable income for the year.

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