1. Preparing for a tax audit. Jacob and Mia Davis have been notified that they are being audited. What should they do to prepare for the audit? 2. Effect of tax credit vs. tax exemption. Explain and...

1. Preparing for a tax audit. Jacob and Mia Davis have been notified that they are being audited. What should they do to prepare for the audit?

2. Effect of tax credit vs. tax exemption. Explain and calculate the differences resulting from a
2,000 tax credit versus a2,000 tax deduction for a single taxpayer in the 25 percent tax bracket with
40,000 of pre-tax income.