Ms. Busch has gathered these data about her finances: Salary 140,000 Taxable interest received 2,500 Municipal bond interest received 15,000 Total itemized deductions 8,000 The personal exemption is $3,700. The standard deduction for a single filer is 5,800. Use the rate schedule in Figure 9-2 to compute the following:

a. Her tax

b. Her average effective tax rate

c. Her average tax rate

d. Her marginal tax rate

e. Her accountant discovers a previously omitted personal deduction of $800. By how much does her federal tax liability fall with that addition?

f. Amazingly enough, the accountant now discovers a $250 credit omitted from previous calculations (but after discovering the $800 in part e). by how much does her federal tax liability fall because of this credit?

If taxable income is: Then Tax is:

$0-8,500 10% of the amount over $0

8,500-34,500 $850 + 15% of the amount over $8,500

34,500-83,600 4,750 + 25% of the amount over $34,500

83,600-174,400 17,025+28% of the amount over $83,600

174,400-379,150 42,499 + 33% of the amount over $174,400

379,150 and over 110,016.50 + 35% of the amount over $379,150