All answers need to reflect the tax laws for New York State, thank you.

David Miller (age 34, SSN 846-66-7922) and his wife, Emily Miller (age 33, SSN 234- 56-7891), reside at 293 E. Main Street in Sterling, MA, 01564 with their two children whom they fully support: Catherine (age 13, SSN 397-73-8399) and Michael (age 11, SSN 397-73-8566). During the year, Emily worked full-time as a customer service representative at a local bank and earned $37,600. Her employer withheld the following from her wages: Federal income tax $2,250.00 State income tax $1,124.60 Social security tax $2,331.20 Medicare tax $545.20 ROTH IRA contribution $5,500.00

David attended college full-time for 5 months and part-time (at least half time) for 7 months in pursuit of a bachelors degree in accounting. He attended the University of Massachusetts, which is located at 600 University Drive in Amherst, MA 01003. David received a tax-free scholarship that paid for most of his college expenses, however, he did pay $900 for tuition and fees. The college did not send David a Form 1098-T for these payments, however, he does have documentation to substantiate his expenditures. This will be the first year that David has claimed any education credits; he does not have any other degrees. The Millers had other income consisting of the following:

Interest on CDs at Platinum Savings Bank $600 Municipal bond interest (state of MA) $2,000.00 Qualified dividends from ABC Corporation $125

The Millers paid $7,000 in qualified childcare expenses so that Emily could work and David could attend college; the amount was evenly divided between the 2 children. Their childcare provider is their neighbor, Kim Johnson (SSN 456-32-9807), who resides at 303 E. Main Street in Sterling.

1) What is the amount of tax-exempt interest that the taxpayers should report on Form 1040? 2) What is the amount of qualified dividends that the taxpayers should report on Form 1040? 3) What is the tax rate that should be applied to those qualified dividends? 4) What is the amount of the AGI? 5) What is the amount of the basic standard deduction? 6) What is the amount of the additional standard deduction? 7) What is the amount of taxable income that the taxpayers have? 8) What is their tax liability?