Question

Chuck, a single taxpayer, earns $75,000 in taxable income and $10,000 in linterest 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 Req A Req 8 Req C Req D How much federal tax will he owe? (Do not round intermediate calculations. Round "Federal tax" to 2 decimal places.) ReqB > < Prev 5of 9 Next > 3 5

Answer 1

As per 2018 tax rate :-

1) Federal Tax :-

= $4453.50 + (22%*($75000-$38700))

= $4453.50 + (22%*$36300)

= $4453.50 + $7986

= $12439.5

2) Average Tax Rate :-

= Total Tax / Taxable Income

= $12439.5 / $75000

= 0.16586 or 16.59%

3) Effective Tax Rate :-

= Total Tax / Total Income

= $12439.5 / ($75000+$10000)

= $12439.5 / $85000

= 0.1463 or 14.63%

4) Current Marginal Tax Rate is 22%.