Case Study: Taxes

Ernesto and Carolyn are married and have three children: a toddler, a teen, and a college freshman. Every year at tax time, they complain about high taxes. How might their tax burden be reduced? What you know: Their gross annual income is $122,635 ($62,842 from Ernesto and $59,793 from Carolyn). They have been doing their taxes individually and filing separately. This is the second marriage for both, and they are set in their ways. They believe it is a hassle to itemize their deductions, so they take the standard options. They have never looked at their tax options. They have been using the 104oEZ form. Use the tax table at IRS.gov to determine their taxes using their current method. What suggestions can you offer them to reduce this number?