Question

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 8970 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

Answer 1

a) Campbell's current taxable income Add: Additional taxable income Total taxable income $400,000 [For a single taxpayer] $0 [Interest income from NY stock is exempted] $400,000 If taxable But not The tax is: income is over: over: $0 $9,700 10% of taxable income $9,700 $39,475 $970 plus $39,475 $84,200 $4,543 plus $84,200 $160,725 $14,382.50 plus $160,725 $204,100 $32,748.50 plus $204,100 $510,300 $46,628.50 $510,300 - $153,798.50 plus Federal tax she owe $115,193.5 ($46628.5+($400000-$204100)x35%] 12% 22% 24% 32% 35% 37% of the excess over $9,700 of the excess over $39,475 of the excess over $84,200 of the excess over $160,725 of the excess over $204,100 of the excess over $510,300 b) Average tax rate = (Federal tax she owe / Total taxable income) x 100 8.50 plus Federal tax she owe Total taxable income Average tax rate $115,193.5 [As calculated in Part-(a)] $400,000 [As explained in Part-(a)] 28.80% [($115193.5 / $400000) x 100) 2019 Tax Rate Schedule --> Schedule X- Single Tax Payer Effective tax rate = (Federal tax she owe / Total income) x 100 Federal tax she owe Total taxable income Effective tax rate $115,193.5 [As calculated in Part-(a)] $402,000 ($400000 + $2000 (Incl. interest income)] 28.66% [($115193.5 / $402000) x 100) d) Current marginal tax rate = Maximum tax slab rate at which taxpayer's taxable income falls. In the given case, Campbell's taxable income falls in 35% slab rate, marginal tax rate is 35.00%.