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Worth $3,950.) Choosing and preparing an individual tax form. Use Worksheets 3.1 and 3.2. Jon Fong graduated from college in 2014 and began work as a systems analyst in July of that year. He is preparing to file his income tax return for 2014 and has collected the financial information shown below for that calendar year Tuition, scholarships, and grants Scholarship, room, and board Salary Interest income $ 5,750 1,850 30,250 185 3,000 2,600 Deductible expenses, total Income taxes withheld a. Prepare Jon's 2014 tax return, using a $6,200 standard deduction, a personal exemption of $3,950, and the tax rates given in Exhibit 3.3. Which tax form should Jon use, and why? b. Prepare Jon's 2014 tax return using the data in part a along with the following information: $5,000 IRA contribution Cash dividends received Which tax form should he use in this case? Why? 150 Effect of tax credit vs. tax exemption. Explain and calculate the differences resulting from a $1,000 tax credit versus a $1,000 tax deduction for a single taxpayer in the 25 percent tax bracket with $40,000 of pre-tax Preparing for a tax audit. Liam and Adriana O'Rourke have been notified that they are being audited. What should they do to prepare for the audit? Getting help with tax form preparation. Bill Schmidt's busy job doesn't leave him much spare time. Consequently, he would like some help preparing his federal tax forms. What advice would you give Bill? Effective tax planning. Explain the key elements of effective tax planning. What are some of the most popular tax management strategies? CHAPTER 3: Preparing Your Taxes

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