Answers
ANSWER
a)Federal Tax | |
Taxable Income | $185,000 |
Taxable Income | Tax Rate |
$151,201 to $230,450 | $29,387.50 plus 28% of the amount over $151,200 |
Tax = $29387.50 + 28% x ($185000 - $151,200) | $38,851.5 |
Jorge and Anita will owe $38,851.50 in federal income tax . | |
b) Average Tax Rate = Total Tax/ Taxable Income | |
Average tax rate = $38,851.50/185000 | 21.00% |
c) Effective Tax Rate = Total Tax/Total Income | |
Effective Tax Rate = $38,851.50/($185,000 + $20000) | 18.95% |
d) | |
Current marginal tax rate | 28.00% |
Jorge and Anita are currently in the 28 % tax rate bracket. Their marginal tax rate on increases in income up to (230450-185000= $45450 and deductions up to($185000 - 151200= $33,800 is 28 percent |
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