A taxpayer has gathered the following data about their finances:

-Salary $140,000

-Taxable interest received $2,500

-Pension income $75,000

-Total itemized deductions $18,000

-The standard deduction for a single filer is $12,550.

-Tax credit = $1,000

Use the rate schedule above to compute the following:

1. The taxpayers gross tax liability.
2. The taxpayers average tax rate.
3. The taxpayers effective tax rate.
4. The taxpayers marginal tax rate.
5. The taxpayers accountant discovers a previously omitted above-the-line deduction of $800. How much does this reduce the taxpayers gross tax liability? How much does this reduce the taxpayers net tax liability?
6. After discovering the $800, he now discovers he has a $250 credit omitted from previous calculations. How much does this reduce the taxpayers gross tax liability? How much does this reduce the taxpayers net tax liability?

\begin{tabular}{|c|c|} \hline Tax rate & \multicolumn{1}{|c|}{ Taxable income bracket } \\ \hline 10% & $0 to $9,950 \\ \hline 12% & $9,951 to $40,525 \\ \hline 22% & $40,526 to $86,375 \\ \hline 24% & $86,376 to $164,925 \\ \hline 32% & $164,926 to $209,425 \\ \hline 35% & $209,426 to $523,600 \\ \hline 37% & $523,601 or more \\ \hline \end{tabular}