You will complete this assignment based on the difference between the standard and itemized deductions and their appropriate application, the steps prescribed in the tax law to determine tax liability, and key income tax planning strategies designed to reduce income tax liability. Based on your review of your tax-related information, you developed the following summary which will be utilized for the first requirement: Form W-2 Wage and Tax Statement Information Category Wages Social Security Tax Withheld Medicare Tax Withheld Federal Income Tax Withheld State Income Tax Withheld (Michigan) Category Bank Savings Account Interest Income Other Tax-Related Information Municipal Bond Investment Interest Income Property Taxes Mortgage Interest Charitable Contributions Amount Standard Deduction $60,000 $3,720 $870 $7,710 $2,700 Amount $250 $250 $3,500 $4,500 $2,550 $13,000 Tax Table Single filer taxable income is: But less than At least $46,900 $46,950 $47,000 $47,050 $47,100 $47,150 $46,950 $47,000 $47,050 $47,100 $47,150 $47,200 Your tax is $6,182 $6,193 $6,210 $6,215 $6,226 $6,237 Requirements 1. Apply the steps prescribed in the tax law to determine tax liability by addressing the following: a. Determine the amount of Gross Income and Adjusted Gross Income and show all of your work. If any income amount should be excluded, provide an explanation as to why. b. Differentiate between the standard and itemized deductions by providing an explanation of each. Next, compute the amount of Itemized Deductions and show all of your work. Compare this amount to the Standard Deduction provided in the table above. Determine the appropriate application of this concept by deciding on the amount to be utilized - Itemized Deductions or Standard Deduction. Support your decision. c. Determine Taxable Income utilizing information from the first two requirements and show all of your work. d. Based on the Taxable Income computed in the previous requirement, use the above Tax Table to determine the amount of Income Tax. Explain how you found the number in the Table. e. Determine the amount of Tax Refund or Tax Owed and show all of your work. 2. Discuss three key income tax planning strategies designed to reduce income tax liability that you could utilize for next year. It is assumed that you do not currently practice any type of income tax planning, so you can "think outside of the box" when answering this question.