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Susan is single with a gross income of $120,000 and a taxable income of $98,000. In calculating gross income, she properly excluded $10,000 of tax-exempt interest income.
Using the tax rate schedules in the chapter, calculate Susan’s:
(a) Total tax
(b) Marginal tax rate
(c) Average tax rate
(d) Effective tax rate

Respuesta :

Answer:

a) $20421.75

b) 28%

c) 20.8%

d) 18.9%

Explanation:

a) Taxable Income $98,000

    Tax on                 91,900   $18,713.75

    Excess                $6,100

    Taxed at Marginal Rate x 28%  1,708

     Total Tax = $20,421.7

b) The marginal tax rate can be defined as the tax rate which is applicable on additional dollar of your income earned. Here at a taxable income of 98000, marginal tax rate would be 28.0%

c) Average tax rate can be calculated as 'total tax divided by taxable income'.

Here the total tax is 20421.7 on a taxable income of 98000, therefore the average rate rate here can be calculated as 20.8%

d) Here Susan has 10000 of tax exempt income.

Therefore, (98000+10000), this means that effective rate is 18.9%.

Calculated as: 20421.7/108000 = 18.9%

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