Question

eBook Calculator Exercise 3-20 (LO. 6) Compute the 2020 tax liability and the marginal and average tax rates for the following taxpayers. Click here to access the 2020 tax rate schedule. If required, round the tax liability to the nearest dollar. When required, round the average rates to four decimal places before converting to a percentage (i.e. .67073 would be rounded to .6707 and entered as 67.07%). a. Chandler, who files as a single taxpayer, has taxable income of $94,800. Tax liability: Marginal rate: % Average rate: % b. Lazare, who files as a head of household, has taxable income of $57,050 Tax liability: Marginal rate: % Average rate: 96 Check My Work CENG

Answer 1

Ans:

1. Filing Status= Single

Taxable income= 94,800

Tax liability= $14,605.50+ 24% of {94,800-85,525}

Tax liability= $14,605.50+ 24% of 9,275

Tax liability= $14,605.50+ 2,226

Tax liability= 16,831.50

Average Tax= Tax/ Taxable income

=> 16,831.50/94,800*100

=> 17.75%

Marginal Tax rate will be 24% in the above case as the taxable income lies in the slab between in excess of 85,525 to 163,300

2. Filing Status= Head of Household

Taxable income= 57,050

Tax liability= $6,162+22% of { 57,050-53,700}

=> $6,162+ 22% of {3,350}

=> $6,162+ 737

=> $6,899

Average Tax= Tax/Taxable income

=> 6,899/ 57,050*100

=> 12.09%

Marginal Tax rate will be 22% in the above case as the taxable income lies in the slab between in excess of 53,700 to 85,500