Question

1. A taxpayer has $95,000 of taxable income for 2020. Indicate the marginal tax rate and calculate the tax if the taxpayer is a a. Single individual b. Married couple filing jointly (Hint: the tax rate schedule for 2020 can be found in your text and on Blackboard (Welcome page, Tax Schedules and Formulas pdf file).

of the amount ... 109 -1046 $ 0 14,100 53,700 85,500 163,300 blackboard stockton.edu gaStockton Portal Tax Schedules and Formulas from test-ACCT 32100 http://blackhardtoonduced-206720 Single--Schedule x Head of household-Schedule z If taxable of the If taxable income is: But not amount income is: But not Over- over The tax is: over Over over- The tax is: $ 0 $ 9,875 $ 0 $ 0 $ 14,100 9,875 40,125 $ 987.50 +12% 9,875 14,100 53,700 $ 1,410,00 + 12% 40,125 85,525 4,617.50 +22% 40,125 53,700 85,500 6,162.00 +22% 85,525 163,300 14,605.50 +24% 85,525 85,500 163,300 13,158.00 + 24% 163,300 207,350 33,271.50 + 32% 163,300 163,300 207,350 31,830,00 + 329 207,350 518.400 47,367.50 + 35% 207,350 207,350 518,400 45,926.00 + 35% 518.400 156,235.00 + 37% 518,400 518,400 154,793.50 +37% Married filing jointly or Qualifying widow(er) Married filing separately-Schedule Y-2 Schedule Y-1 If taxable of the If taxable income is: But not amount income is: But not Over- over- The tax is: Over Over- over- The tax is: $ 0 $ 19,750 $ 0 $ 0 $ 9,875 80,250 $ 1,975.00 +12% 9,875 19,750 40,125 $ 19,750 987.50 + 129 80,250 9,235.00 + 22% 171,050 80,250 85,525 4,617.50 +22% 171,050 326,600 29,211,00 + 24% 171,050 163,300 14,605.50 +24% 326,600 414,700 66,543.00 + 32% 326,600 163,300 207,350 33,271.50 +32 207,350 518,400 of the amount over 5 0 9,875 ... 10% 10 40,125 85.525 40,125 85,525 163,300 16

Answer 1

Marginal tax rate would be the tax rate of that range where the taxable income fits in. Marginal tax rate would be then used to compute income tax for the taxpayer.

a. Single individual

Schedule X would be applicable.

This falls in the range of $ 85,525 to 163,300.

Marginal rate of tax would be 24% for amount above $ 85,525

Tax payable = 14,605.5 + 24% of (95,000 – 85,525)

                      = 14,605.5 +2274

                       = $ 16,879.50

b. Married couple filing jointly

Schedule Y-1 would be applicable

The applicable range would be from $ 80,250 to 171,050

Marginal rate of tax would be 22% above 80,250

Tax payable = 9235 + 0.22 (95000-80,250)

                      = 9235 + 3245

                      = $ 12,480