Question

Scot and Vidia, married taxpayers, earn $240,000 in taxable income and $5,000 in interest from an investment in City of Tampa bonds. (Use the U.S. tax rate schedule for married filing jointly).

2019 Tax Rate Schedules

Individuals

Schedule X-Single

If taxable income is over:	But not over:	The tax is:
$           0	$    9,700	10% of taxable income
$    9,700	$ 39,475	$970 plus 12% of the excess over $9,700
$ 39,475	$ 84,200	$4,543 plus 22% of the excess over $39,475
$ 84,200	$160,725	$14,382.50 plus 24% of the excess over $84,200
$160,725	$204,100	$32,748.50 plus 32% of the excess over $160,725
$204,100	$510,300	$46,628.50 plus 35% of the excess over $204,100
$510,300	—	$153,798.50 plus 37% of the excess over $510,300

Schedule Y-1-Married Filing Jointly or Qualifying Widow(er)

If taxable income is over:	But not over:	The tax is:
$           0	$ 19,400	10% of taxable income
$ 19,400	$ 78,950	$1,940 plus 12% of the excess over $19,400
$ 78,950	$168,400	$9,086 plus 22% of the excess over $78,950
$168,400	$321,450	$28,765 plus 24% of the excess over $168,400
$321,450	$408,200	$65,497 plus 32% of the excess over $321,450
$408,200	$612,350	$93,257 plus 35% of the excess over $408,200
$612,350	—	$164,709.50 plus 37% of the excess over $612,350

Schedule Z-Head of Household

If taxable income is over:	But not over:	The tax is:
$           0	$ 13,850	10% of taxable income
$ 13,850	$ 52,850	$1,385 plus 12% of the excess over $13,850
$ 52,850	$ 84,200	$6,065 plus 22% of the excess over $52,850
$ 84,200	$160,700	$12,962 plus 24% of the excess over $84,200
$160,700	$204,100	$31,322 plus 32% of the excess over $160,700
$204,100	$510,300	$45,210 plus 35% of the excess over $204,100
$510,300	—	$152,380 plus 37% of the excess over $510,300

Schedule Y-2-Married Filing Separately

If taxable income is over:	But not over:	The tax is:
$           0	$    9,700	10% of taxable income
$    9,700	$ 39,475	$970 plus 12% of the excess over $9,700
$ 39,475	$ 84,200	$4,543 plus 22% of the excess over $39,475
$ 84,200	$160,725	$14,382.50 plus 24% of the excess over $84,200
$160,725	$204,100	$32,748.50 plus 32% of the excess over $160,725
$204,100	$306,175	$46,628.50 plus 35% of the excess over $204,100
$306,175	—	$82,354.75 plus 37% of the excess over $306,175

Required:

1. If Scot and Vidia earn an additional $80,000 of taxable income, what is their marginal tax rate on this income?
2. What is their marginal rate if, instead, they report an additional $80,000 in deductions?

(For all requirements, round your answers to 2 decimal places.)

Answer 1

Answer

Caset computation of total income al sool and Vidia, Married taxpayer, piling gulntly Tanable income add addtional income 30,000 A Standard road deduction 21.40 ] Tux an income [married piling jointly = 28.765+ (2.95,600 1,68,400) 24% : 28.700 + (1.27, 2• • 24%) : 59.213 Tax rate a 59,293 3,20,000 -xloo 18.52%

page-2 addtional deduction $80,000 Case ? - If they report 240,00 o - Taxable income - (-) addtional deduction 80,ooo 1,60,ooo 24,400 (-) standard deduction if married piling 1135,600 si Tax on income [1,35,600] [married jointly $9086 + (1.35,600 – 78.950) x 2 27. = 9086 & 12,463 = 21,549 Tax rate = 21,549 1,60,000 x 100 = 13.47% - 13.50%. (approx) rounded off Note :- &5000 in interest from an investment in est. tampa bonds (municipal bond) is tax free .
see the above 2 sheets as answer