Question

Chuck, a single taxpayer, earns $75,000 in taxable income and $10,000 in interest from an investment in City of Heflin bonds. (Use the U.S tax rate schedule) Required: a. How much federal tax will he owe? b. What is his average tax rate? c. What is his effective tax rate? d. What is his current marginal tax rate? Complete this question by entering your answers in the tabs below. Reg A Req B Reg C Req D How much federal tax will he owe? (Do not round intermediate calculations. Round "Federal tax" to nearest dollar.) Federal tax Req A Req B >

2019 Tax rate schedule

2019 Tax rate schedule

Answer 1

Part A

Federal tax

$12359

Federal tax (on $75000) = 4543+(22%*(75000-39475)) = $12358.50 (using tax rate schedule 2019)

Interest on municipal bonds is tax exempted

Part B

Average tax rate

16.48%

Average tax rate = total tax / total taxable income = 12358.50/75000

Part C

Effective tax rate

14.54%

Effective tax rate = total tax / total income = 12358.50/(75000+10000) = 14.54

Part D

Marginal tax rate

22%