Paul is preparing his tax return for the year. All of the relevant information he needs for filing are listed below. -The individual earned $75,000 last year and earned no investment income. -He had no qualifying above-the-line deductions -He spent $7,500 on child care expenses and he is eligible for a 10% tax credit -He has two children and earns a tax credit of $1,000 for each child. -He spent $5,000 on non-reimbursed medical expenses; medical expenses >10% of AGI are deductible -He spent $4,000 on mortgage interest; mortgage interest is deductible -He donated $2,000 to charity; charitable donations are deductible -The standard deduction for single filers is $8K -The individual is taxed 15% on the first $40K of income and 25% for all income above this.

Determine Pauls adjusted gross income.

$75,000

$69,000

$67,000

$62,000

If Paul used itemized deductions, how much would he be able to deduct?

$8,500

$11,000

$6,000

$8,000

Assuming Paul uses the standard deduction, determine Pauls tax liability after credits.

$11,750

$12,000

$10,000

$12,750