Austin and Anya Gould are a middle-aged couple with twochildren, Rusty, age 13 and Sam, age 11, both of whom they adopted this year. They also bought a new home in the area to give the children a yard in which to play. The Goulds also have an extensive retirement portfolio invested primarily ingrowth-oriented mutual funds. Their annual investment income is only $600, none of which is attributable to capital gains. Austin works in the banking industry and receives an annual income of $32,400. Anya, who owns the only travel agency in town, makes about 39,600 a year. The Goulds give extensively to charities. They also have tax deductions from their mortgage interest expense, business expenses, tax expenses, and unreimbursed medical expenses LOADING... . Remember that Anya has some special tax expense deductions because she is self-employed. Be sure to include them when estimating their 2014 taxes. In calculatingAnya's Social Security and Medicare taxes, ignore the special FICA rate for 2014

and use the FICA rates of 6.20% for Social Security and 1.45% for Medicare. a. Calculate Anya's Social Security and Medicare taxes. Calculate how much of these taxes are deductible. b. Calculate the Goulds total income and adjusted gross income for the year. c. Are the moving expenses deductible? Why or why not? d. Should the Goulds take the standard deduction or should theyitemize? What is the amount of their deduction? e. What tax form will the Goulds use? Why? f. What credits might the Goulds use to reduce their tax liability?

The Goulds' expenses are as follows:

Health insurance (provided by Anya)

$2,300

Rusty's braces

$1,300

Mortgage interest expense

$7,250

Real estate taxes

$800

Investment and tax planning expenses

$1,400

Other medical expenses

$3,800

Charitable contributions

$3,500

Moving expenses

$2,900

Austin's unreimbursed business expenses

$2,350

Qualified adoption expenses

$7,300

State taxes withheld and owed

$3974