By defining after-tax income, demonstrate the differences resulting from a $2,000 tax credit versus a $2,000 tax deduction for a single taxpayer in the 25% tax bracket with $39,000 of pre-tax income. Round your answers to two decimal places. (UseExhibit 3.3.)

Deduction$_____

Credit$_____

2014 Tax Rate Schedules Schedule X-If your filing status is Single If your taxable The tax is: income is: But not of the Over- Over- amount over- SO $9,075 - -.. ... 10% SO 9,075 36,900 $907.50 + 15 9,075 36,900 89,350 5,081.25 + 25 36,900 89,350 186,350 18,193.75 + 28 89,350 186,350 405,100 45,353.75 + 33 186,350 405,100 406,750 117,541.25 + 35 405,100 406,750 . ..... 118,118.75 + 39.6 406,750 Schedule Y-1-If your filing status is Married filing jointly or Qualifying widow(er] If your taxable income is: The tax is: Over- But not of the Over- amount over- SO $18,150 -.. .... 10% 18,150 73,800 $1,815.00 + 15 18,150 73,800 148,850 10,162.50 + 25 73,800 148,850 226,850 28,925.00 + 28 148,850 226,850 405,100 50,765.00 + 33 226,850 405,100 457,600 109,587.50 + 35 405,100 457,600 . ..... 127,962.50 + 39.6 457,600 Schedule Y-2-If your filing status is Married filing separately If your taxable income is: The tax is: of the Over- But not over- amount over- SO $9.075 ..mmm. 10% SO 9,075 36,900 $907.50 + 15 9,075 36,900 74,425 5,081.25 + 25 36,900 74,425 113,425 14,462.50 + 28 74,425 113,425 202,560 25,382.50 +33 113,425 202,550 228,800 54,793.75 + 35 202.550 228,800 63,981.25 + 39.6 228,800 Schedule Z-If your filing status is Head of household If your taxable The tax is: income is: of the Over- But not amount over- over- $12,950 . . .mmm. 10% 12,950 49,400 $1,295.00 + 15 12,950 49,400 127.560 6,762.50 + 25 49,400 127,550 206,600 26,300.00 + 28 127,550 206,600 405,100 48,434.00 + 33 206,600 405,100 432,200 113,939.00 + 35 405,100 432,200 123,424.00 + 39.6 432,200