Complete the following problems in Word or Excel:Problem 1:Loretta is a single taxpayer has the foll

Complete the following problems in Word or Excel:Problem 1:Loretta is a single taxpayer has the following income and deductions for the current tax year:INCOMESalary $ 70,000Business Income 25,000Interest Income from bonds 10,000Tax-exempt bond interest 5,000Total Income $110,000DEDUCTIONS: Business expenses $ 10,000Itemized deductions 20,000Personal exemption 4,000Requirements:Compute the taxable income and federal tax liability for the current yearCompute the marginal, average and effective tax rates.For tax planning purposes, which of the three rates in part 2 is the most important?Problem 2:For the following tax payers, fill out the following table:Tax form: 1040, 1040A, 1040-EZFiling status:S, MFJ, MFS, HOH, W# of personal and dependency exemptions# of children qualifying for child creditAmyBobCharlieDonnaEdnaAMY is a single college student who earned $7,700 working part-time. She had $200 of interest income and received $1,000 of support from her parents.BOB is a single college student who earned $7,700 working part-time. He had $1,600 of interest income and received $1,000 of support from his parents.CHARLIE is divorced and received $6,000 of alimony from her former husband and earned $12,000 working as a secretary. She also received $1,800 of child support for her son who lives with her. According to a written agreement, her former husband is entitled to receive the dependency exemption.DONNA is a widow, age 68, who receives a pension of $8,000, nontaxable social security benefits of $8,000, and interest of $4,000. She has no dependents.EDNA is married, but her husband left her two years ago and she has not seen him since. Edna supported herself and her daughter, age 6. She paid all household expenses. Her income of $16,000 consisted of a salary of $15,200 and interest of $800.Problem 3:Terry is a single taxpayer, age 18. Terry has salary of $1,800, interest of $1,600 and Itemized deductions of $600.Requirements:Assuming Terry is self-supporting, what is Terry’s taxable income?Assuming Terry is a dependent for the parents, what is Terry’s taxable income?