Liam McKenzie is single, graduated from college in 2018 and began work as a system analyst in July of that year. He is preparing to file his income take return for 2018 and has collected the financial information shown below for that clear year.

Scholarship used to pay tuition - $5,750

Scholarship used to pay room and board - $1,850

Salary - $55,000

Interest Income- $185

Potential itemized deductions - $3,000

Income Taxes Withheld- $2,600

a.Prepare Liam's 2018 tax returns, using a $12,000 standard deduction and the tax rates given in below Individual Taxpayers

If Taxable Income Is Between: The Tax Due is: 10% of taxable income $952.50 + 12% of the amount over $9

b. Prepare Liam's 2018 tax return using the data in part a along with the following information IRA contribution $5,000 Cash Dividends received $150

Individual Taxpayers If Taxable Income Is Between: The Tax Due is: 10% of taxable income $952.50 + 12% of the amount over $9,525 $4,453.50 + 22% of the amount over $38,700 0 - $9,525 $9,526 - $38,700 $38,701 - $82,500 $82,501 - $157,500 $157,501 - $200,000 $200,001 - $500,000 $500,001 + $14,089.50 + 24% of the amount over $82,500 $32,089.50 + 32% of the amount over $157,500 $45,689.50 + 35% of the amount over $200,000 $150,689.50 + 37% of the amount over $500,000 Individual Taxpayers If Taxable Income Is Between: The Tax Due is: 10% of taxable income $952.50 + 12% of the amount over $9,525 $4,453.50 + 22% of the amount over $38,700 0 - $9,525 $9,526 - $38,700 $38,701 - $82,500 $82,501 - $157,500 $157,501 - $200,000 $200,001 - $500,000 $500,001 + $14,089.50 + 24% of the amount over $82,500 $32,089.50 + 32% of the amount over $157,500 $45,689.50 + 35% of the amount over $200,000 $150,689.50 + 37% of the amount over $500,000