1. The IRS publishes Tax Rate Schedules and a Tax Table. When must taxpayers use the Rate Schedules instead of the Tax Table to compute their income tax liability?

2. Mark Long (unmarried) files his tax return using head of household filing status. His taxable income is $60,550.

a. What is Longs tax liability using the Tax Table?

b. Compute Longs tax liability using the Tax Rate Schedule. Explain any difference in your answers to Parts a. and b.

3. Barbara Landerson, age 25, files as a single taxpayer. She is employed at a monthly salary of $2,150. She claims no dependents. Her employer withheld $1,600 from her wages for income taxes for 12 months of work. Compute of Landersons income tax due to or from the IRS.

4. Compute the taxable income and income tax liability (before refundsand credits) for each of the following taxpayers. Each taxpayer uses the standard deduction.

a. A widowed taxpayer, age 30, has one dependent. She files as surviving spouse, and her AGI is$46,400.

b. An unmarried taxpayer, age 74, has no dependents and AGI of $19,590.

c. A taxpayer, age 40, is married but fi les a separate return from his spouse. Th e taxpayer is thenoncustodial parent of his 8-year-old child. His wife has signed Form 8832 giving him the right to claim their daughter as a dependent. AGI is $130,580.

d. An unmarried taxpayer, age 72, is claimed as a dependent on her sons return. Her AGI consists solely of $3,150 of taxable interest.

e. A married couple, ages 67 and 66, fi le a joint return. They claim one dependent. AGI is$161,555.

5.What is the difference between a tax credit and a tax deduction?If a taxpayer with a marginal tax rate of 15% has a $1,000 deduction, how much tax willshe save? How much tax will she save with a $1,000 tax credit?

6.Bud and Katie Milner file a joint return. During theyear, they paid $11,000 to their nanny to look after their three children, ages 2, 9, and 11. Budand Katie both work and earned $24,000 and $31,000, respectively. Th e wages are the Milnersonly source of income, and they have no deductions for AGI.

a. Compute the Milners child and dependent care credit.

b. Compute the Milners child and dependent care credit assuming Katie received a $4,000 nontaxable reimbursement from her employers dependent care plan.