You have set up your tax preparation firm as an incorporated business. You took $70,500 from the firm as your salary. The firm’s taxable income for the year (net of your salary) was $29,000. Assume you pay personal taxes as an unmarried taxpayer. Use the tax rates presented in Table 3-5 and Table 3-7.

You have set up your tax preparation firm as an incorporated business. You took $70,500 from the firm as your salary. The firm’s taxable income for the year (net of your salary) was $29,000. Assume you pay personal taxes as an unmarried taxpayer. Use the tax rates presented in Table 3-5 and Table 3-7.

a.	How much taxes must be paid to the federal government, including both your personal taxes and the firm’s taxes?

Total taxes

b.	By how much will you reduce the total tax bill by reducing your salary to $50,500, thereby leaving the firm with taxable income of $49,000?

Total taxes reduced

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