QUESTION: We got our 1977 tax package from the IRS today, and we're confused. There isn't any place on Form 1040 to deduct for exemptions or the $35 tax credit. We haven't heard anything about these being cancelled. What gives?

ANSWER: They haven't been cancelled, and your confusion is understandable. But the IRS has actually simplified the job of preparing your return.

This year there are individual tax tables for each filing status, and separate columns in each table for various numbers of exemptions. If you use the tax tables, simply find the right table, the right column, and the right line for you "Tax Table Income" (line 34 of Form 1040) or "Adjusted Gross Income" (line 10 of 1040A).

The amount of tax shown at the intersection of the "income" line and the "exemption" column already takes into account personal and dependent exemptions, the zero bracket amount (new term for the standard deduction), and the general tax credit.

If you are not eligible to use the tax tables, you must compute the tax form one of the tax rate schedules. The schedules already account for the zero bracket amount, but you claim exemptions and the general tax credit on Schedule TC (the new Tax Computation Schedule).

For a taxpayer who itemizes deductions, line 33 on Form 1040 provides a place to enter excess deductions (from Schedule A) over the zero bracket amount.

All this may sound complicated, but it is simpler in the doing than in the explaining. There's a little less arithmetic for everyone, which means less chance for error. Computing your tax liability should be easier this year, although probably no less painful.

Q: I am the main support for my mother, but the iRS won't let me claim her as a dependent because she has about $1,000 a year interest income on her bank account (from my father's insurance) plus low social security benefits. This seems unfair, since she really is dependent on me. Is there any way out of this box?

A: Since your letter indicates thay you're contributing more than half your mother's support, the sticker is the $1,000 interest. The social security benefits don't count, since the $750 annual income test applies only to taxable income.

This points the way to a possible solution. If your mother was to move the money now in the bank to a municipal bond investment, the income would be nontaxable, and thus wouldn't be counted for this test. And she wouldn't have to move all of it - just enough to bring the annual taxable interest on the balance under $750.

I suggest a municipal bond unit trust.New issues are yielding around six per cent - which is as much as or more than the money is now earning if it is in a passbook account, and not a great deal less if she owns a CD (certificate of deposit).

The tax-free nature of the municipal bond interest is no break for your mother, since she has no tax liability anyway - but it would give you the $750 exemption.

An alternative is for your mother to give you the money now. Again she would only have to give you a little more than a quarter of the total, to bring the income on what she retains below $750. (There would be no gift tax liability, since her total estate does not appear to be anywhere near the combined gift/estate tax exclusion.)

If she is unhappy with either of these suggestions, then you'll just have to forget about the exemption. But if you itemize deductions and your mother had medical expenses, pay her medical bills directly instead of giving her the money to pay them. You can then include them with your own medical expenses on Schedule A, and at least salvage an increase in your deductions.

Q: I recently bought a life insurance policy, and I think I understand everything except the "automatic premium loan." What is this - and is it a good thing?

A: The automatic premium loan is simply a provision authorizing the insurance company to pay any missed premiums by an automatic loan against the cash value of your whole life policy. (It is not normally available on term insurance.)

It should always be requested if not included in the terms of the basic policy. This provision costs you nothing and the insures against inadvertent lapse of the policy if you should fail, for whatever reason, to pay one or more premiums by the end of the grace, period (usually 30 days after the due date), as long as there is enough cash value remaining.

A column on family finances and taxes will appear in The Washington Post Business & Finance section on alternate Fridays. The author, E. M. Abramson is family financial counselor and tax adviser. Questions of general interest on tax matters, insurance, investments, estate planning and other aspects of family finances will be answered in the column. Advice cannot be given on an individual basis. Address will questions to E. M. Abramson, The Washington Post, Business & Finance News, 1150 15th St. NW., Washington, D.C. 20071.