Question

1. Mr. Jones is a single person who makes $45,000 in 2019. This year she paid $2,000 in student loan interest and $3,600 to her 401(k) plan at work. Calculate the following A. Adjusted Gross Income. B. Assuming only standardized deductions available, what is his taxable income for 2019? C. Using 2019 tax brackets, what is his marginal federal tax rate? D. Total federal tax due. E. Average federal tax rate on taxable income. F. Calculate the FICA tax due. G. Assuming no state and city tax rate, what is his effective marginal tax rate?

Answer 1

Part A

Gross income		45000
Above the line deductions
Interest on student loan	2000
Contribution to 401(K) plan	3600	5600
Adjusted gross income		$39400

Part B

Adjusted gross income	$39400
Standard Deduction	12200
Taxable income	$27200

Part C

Marginal tax rate

12%

Because Mr. Jones taxable income is beteen 9701-39475

Part D

Federal tax due

$3070

Federal tax due = 970+(12%*(27200-9700))

Part E

Average tax rate

11.29%

Average tax rate = total federal tax / total taxable income = 3070/27200

Part F

Average tax rate

$3443

FICA tax = gross income* (6.2%+1.45%) = 45000*(6.2%+1.45%)= $3442.50

Part G

Effective marginal tax rate

14.47%

Effective marginal tax rate = total tax / gross income = (3070+3443)/45000