Data:

Matt and Janina, ages 42 and 40, are married and filling out their 2010 taxes.They contributed $5,000 to a traditional IRA in 2009. They have four children, three under 17 and one a dependent in college. They can only deduct medical bills above 7.5 percent of AGI, and job related expenses above 2 percent of your AGI. Exemptions are $3,650 per person, the standard deduction for married filing jointly is $11,400 and the child tax credit is $1,000 per child under 17.

Tax rates for 2010 for married filing jointly are:

0 to $16,750	10%
$16,750 to $68,000	$1,675 plus 15% of the amount over $16,750
$68,000 to $137,300	$9,363 plus 25% of the amount over $68,000
Income:    Earned Income	$80,000
Interest Income	10,000
Expenses: Home mortgage interest	6,800
Un-reimbursed medical bills	7,000
Un-reimbursed job-related expenditures	2,000
Tithes and offerings	9,600

                             

Calculations:

Using the married filling jointly status and the information below, calculate their taxes first using the standard deduction and then using itemized deductions. Calculate their marginal tax rate and average tax rate on total income.

Recommendations:

Which way should they calculate their taxes? What could they do to reduce their taxes?