Question

An examination of the tax rate schedules for single taxpayers for 2020 indicates that the tax is a given dollar amount plus a percentage of taxable income exceeding a particular level.

a) Explain how the "given dollar amounts" are determined.

b) Assuming the taxpayer has a taxable income of $50,000 and is single, what is the tax liability for 2020?

c)What is the taxpayers marginal tax rate?

d) What is the taxpayers average rate?

e) Assuming the taxpayer has tax-exempt interest income from multipal bonds of $30,000, what is the taxpayers effective tax rate?

Answer 1

Solution : P.Noi a) Determination of Single Dollars Amount: Single Taxpayer 2020 rates ale Not over 2020 taxes Over C$) of amount Over 9,975 10. 9,975 37,650 93750 +15). 9,375 37,650 91,150 5,183.75 +95). 37,650 91,150 190,150 18,558.75 + 287. 91,150 190, 150 413,350 46,278.75 + 334. 190,150 413, 350 415,050 119,934.75 +354 413, 350 418, 050 + 415,050 А A B B-A) ($) ($) Bracket (8) Spread ($) Amout Cumulatine 9,275 9,375 Oy. 927.50 9 27.50 9,975| 37,650 98,375 | 151.4,956.25-7 5,183.76 37,654 91,150 53,500 35 4. 13, 18, 558.75 91,150 190,150 99,000 28y. 97,720 * 46,878.75 190,154 413,350 223,200 33973,656 $ 119,934.75 375

P.No.2 Tax liability of Dodo for single taxable Income of $50,000 is Amout $ 5,183.75 Tax on $ 37, 650 Tax on Exces is 25% $ 3,087.50 0.95 50,000 – $37,650 $ 12,350 Tax $ 8,270.95 Tax payer's marginal tare Rate last unit of Base aso, in this Care of is 25% Tax d) Average tax Rate - Taxable income $ 8,270.25 $50,000 16.54%.

P.No.3 e) Effective yon Rate of fax - Exempt income from multipal Bonds interest of $ 30,000 - \ lax Total income $ 8,970.95 $ 50,000 + $ 30,000) $ 8,370.95 $ 80,000 10. 34% please give me a positive like.