Question

Problem 1-35 (LO 1-3)

Chuck, a single taxpayer, earns $75,250 in taxable income and $26,250 in interest from an investment in City of Heflin bonds. (Use the U.S. 2018 tax rate schedule.)

2018 Tax Rate Schedules Schodule X-Singla Schedale 2 Head of Homschold Ir tasable income s over: But not oner: The tax B: If tasable income is over: But not over: 13,600 S 51,800 $82,500 $157,500 The tax k: S 9.323 38,700 $ 82,500 $157.500 $200,000 9525 S38.700 32.500 157500 10% of trable income 5952 50 plag 12% of the excess over 39,525 $4,453.50 plus 22% of the ecess over $38,700 $14,009.50 plus 24% of tha anpass over $22,500 $32,089,50 plus 32% of the eoness over S 157,500 $45,609.50 plus 35% of the excess over $200,000 SI 50,689.50 ptus 37% of the eccess over $500,000 S 13.600 51,800 $ 82.500 157.500 $100,000 10% of taxable income $1.360 plus 12%oftheexcess over S13.600 55944 plus 22% of the escess over $5 1,800 $12,098 plus 24% od the mass over $82,500 $30,098 ptas 32% of the excess over s 157.500 $44,298 plus 35% ofthe ences; oner $200,000 $ 149,295 plus 37% of the excess orer SS00000 $500,000 $500,000 Schedule Y-1-Married Filing Jointly or Qualitying Widow(es) Schedule Y-2-Married Filing Separ ately If tatable income in over But not over S 19.050 $ 17.400 $165,000 315,000 The tax If taxable income in over: But not over The tax i 19,050 77,400 $165.000 $315,000 10% or taxable income $1,905 plu; 12% of the eccess over $19.050 $3.907 pan 22% of the access ovr $77,000 $28,179 plus 24% of the excess over $165,000 $64,179 plua 32% of tho ancess over $315,000 $91.379 pan 35% of the excess ow S400.000 $161,379 plus 37% of the excess over S600.000 $ 9525 38,700 S 2,500 $157,500 5200,000 $100,000 $ 9.525 S 38,700 $82,500 $157,500 $200,000 S300,000 10% of taxable income 9952.50 plus 12% od the ence" over $9,525 $4,453.50 pm 22% of tha access over $38,700 $14,009.50 plus 24% of the escess ver $82.500 $32,009.50 plus 32% of the ocess or or $157,500 $45.689 .50 plus 35% of the ences; over S200000 SSO,609.50 plus 37% ofthe excess over $300,000 $600,000

Required:

1. If Chuck earns an additional $64,000 of taxable income, what is his marginal tax rate on this income?
2. What is his marginal rate if, instead, he had $64,000 of additional deductions?

(For all requirements, do not round intermediate calculations. Round your answers to 2 decimal places.)

Answer 1

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