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Problems: Chapter 3 Real Life Personal Finance (pg. 122) question 3 Calculate the following: a. What is Eric's taxable income? (Refer to Exhibit 3-1.) b. What is his total tax liability? (Use the tax table in Exhibit 3-5.) What is his average tax rate? Exhibit 3-5 Tax Tables and Tax Rate Schedules Copyright () McGraw-Hill Education. Permission required for reproduction or display. Federal Tax Rate schedules c. Based on his withholding, will Eric receive a refund or owe additional tax? What is the amount? Chapter 3 Real life personal finance A SINGLE FATHER'S TAX SITUATION Ever since his wife's death, Eric Stanford has faced difficult personal and financial circumstances His job provides him with a fairly good income but keeps him away from his daughters, ages and 10 , nearly 20 days a month. This requires him to use in-home child care services that consum a major portion of his income. Since the Stanfords live in a small apartment, this arrangement ha been very inconvenient. Due to the costs of caring for his children, Eric has only a minimal amount withheld from his salary for federal income taxes. Thus, more money is available during the year, but for the last few years he has had to make a payment in April - another financial burden. Although Eric has created an investment fund for his daughters' college education and for hi retirement, he has not sought investments that offer tax benefits. Overall, he needs to look a several aspects of his tax planning activities to find strategies that will best serve his current an future financial needs. Eric has assembled the following information for the current tax year: Earnings from wages, $114,241 Interest earned on savings, $65 IRA deduction, $6,500 Checking account interest, $45 Current standard deduction for filing status, $18,350 Amount withheld for federal income tax, $8,825 Tax credit for child care, $1,200 Child tax credit, $4,000 Filing status: head of household