Chen, a single taxpayer, had the following income and deductions during 2018:

Salary $55,000

Interest on bank account 750

Tax-exempt interest 500

Deduction for AGI 5,500

Itemized deductions 15,000

Taxes withheld 5,500

Calculate Chen's tax liability due or refund.

1. $1,010.50 tax liability.
2. $1,010.50 refund.
3. $705.50 tax liability. D) $705.50 refund.