QUESTION: It seems to me that the sales tax tables provided by the IRS are way off the mark for individuals with upper middle incomes. I would appreciate some insight into how the tables are derived, how realistic they really are, if regional factors are considered and what options are available to the taxpayer.

ANSWER: The sales tax tables are developed from data provided by Bureau of Labor Statistics, including buying habits of individuals and families at various income levels.

The spending patterns thus derived are then applied to sales tax information supplied by the several states, to arrive at a typical sales tax figure for each income bracket for family units of different sizes. IT has been my experience that the table allowances, while not generous, do approximate actual sales tax expenditures.

Sales taxes paid on specified major purchaser such as a car or boat may be added to the table amount. And in some states - but not Maryland. Virginia, or D.C. - the table allowance may be increased by local sales taxes, calculated in accordance with the instructions that accompany the table.

Q: I recently borrowed money on my life insurance policy. I though the cash value of the policy was my own money - so why do I have to pay interest on the loan?

A: You're right - the money you borrow from an insurance company on your whole life policy is really your own cash value. However, when you bought the policy you contracted to make regular premium payments which included both the cost of the insurance protection and a savings portion kept for you by the company in the form of increasing cash value.

When calculating the premiums, the company took into account the income which that cash value, properly invested would be earning. If you borrow the money, the company charges you interest to compensate for the lost income.

In fact, today's high interest rates make a policy loan one of the least expensive ways to borrow money. Many insurance companies are concerned over the large increases in both number and dollar amount of policy loans in recent years, diverting funds at an interest rate of five or six per cent that could be earning substantially more from other investments.

Remember that the amount of your loan will be deducted from the face amount to be paid to your beneficiary if you should die before the loan is repaid.

Q: I work full time while my husband is attending school for his law degree. Why cant' we get the same tax break on day care expenses for our four-year-old as a working couple?

A: But you can! The Tax Reform Act of 1976 authorized a tax credit for child care in just the circumstances you describe. Credit is claimed on a month-by-month basis, and only for those months in which the parent attending school was a full-time student.

For purposes of calculating the credit, "earned income" of $166 a month (for one dependent, as in your case) or $333 a month (for two or more) is assumed for the student. But if the working spouse has earned income of less than whichever of these amounts applies, then you must use the lesser actual earnings in the computation.

This credit was made available retroactively for the dull calendar year 1976. If you didn't take advantage of it, you can now file an amended 1976 return for a refund. Use IRS Form 1040X, explaining the reason for the admendment on the back; and attach Form 2441 showing your calculations for the credit.

Q: Can a self-employed person make payments into a Keogh retirement pland and also pay social security tax on the same earnings?

A: Yes. Deposits to a Keogh plan have no effect on the requirement to report and pay social security tax on earnings from self-employment.

Neither payment should be taken into account when determining the base for the other. That is, social security tax is computed on net earnings before deducting any Keogh payments; and 15 per cent ceiling on Keogh is computed without deducting social security tax paid.