Introduction Twanya and Lewellyn Madison are married and have one son. Twanya works part-time and Lewellyn works full-time as salesclerks in the same department store.
Step One
The Madisons complete their joint federal income tax return for last year's income. Their gross income last year was \( \$ 44,150 \). They had adjustments to income for an approved retirement plan of \( \$ 2,870 \). They also itemized their deductions and found a total of \( \$ 8,380 \). They claimed three exemptions (one each for Twanya, Lewellyn, and their son) at \( \$ 3,100 \) each.
1. What is their taxable income?

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2. Using the tax table, what is the amount of their federal income tax?


3. The Madisons' employer deducted \( \$ 2,704 \) in federal withholding taxes during the year. Will the Madisons have to pay more taxes or will they receive a refund, and what is the amount?