Mr. Hoosier has gathered all these data about his finances.
Salary
$159,000
Taxable interest
$5600
Municipal Bond interest
$20,000
Total Itemized deductions
$9500
The personal exemption is $4700. The standardized deduction for a single filer is 5000.
Single Filer
If Taxable Income is
Then tax is:
0-8000
10% of the amount over 0
8000- 35,000
800 + 15% of the amount over 8000
35000- 55,000
4850 + 20% of the amount over 35000
55000- 150,000
8850 + 30% of the amount over 55000
150000 – 200000
37350 + 35% of the amount over 150000
200000 and over
54850 + 40% of the amount over 200000
Married filing jointly:
If Taxable Income is
Then tax is:
0-8000
10% of the amount over 0
8000- 35,000
800 + 18% of the amount over 8000
35000- 55,000
4850 + 22% of the amount over 35000
55000- 150,000
8850 + 35% of the amount over 55000
150000 – 200000
37350 + 37% of the amount over 150000
200000 and over
54850 + 45% of the amount over 200000
a. What is his tax?
b. His average effective tax rate
c. His average tax rate
d. His marginal tax rate
e. Assume he discovers that he is eligible for a 500 tax deduction. How much does his tax liability fall with
that addition?
f. Now he discovers that he is eligible for a $500 tax credit. How much does his tax liability fall due to this
credit?
How is the Tax Calculation Done?
In given case, if you are a filing your taxes as 'single', have no children, are below the age of 65, and you are not blind, with the consideration of the standard tax deduction will be:
Calculations based on preliminary 2019 tax tables:
Tax computation
|
Gross income |
USD |
|
|
Salary |
159,000 |
|
|
Interest |
5600 |
|
|
Municipal Bond interest |
Exempt |
|
|
Total gross income |
164600 |
|
|
Adjustments |
0 |
|
|
Adjusted gross income (AGI) |
164600 |
|
|
Less - standard deduction |
50 00 |
|
|
Taxable income |
159600 |
|
|
Tax thereon |
||
|
On taxable income of 159600 |
40710 |
|
|
(37350+35% of (159600-150000)) |
||
|
Total tax before credits |
40710 |
|
|
Less - credits |
||
|
Net tax |
40710 |
= 40710/159600
= 25.51%
= 25.51%
= 35%
=Net tax – Tax deduction
= 40710-500
= $40210
=Total tax before credit – Credit
= 40710-500
= $40210
Mr. Hoosier has gathered all these data about his finances. Salary $159,000 Taxable interest $5600 Municipal Bond intere...
Mr. Hoosier has gathered all these data about his finances. Salary $159,000 Taxable interest $5600 Municipal Bond interest $20,000 Total Itemized deductions $9500 The personal exemption is $4700. The standardized deduction for a single filer is 5000. Single Filer If Taxable Income is Then tax is: 0-8000 10% of the amount over 0 8000- 35,000 800 + 15% of the amount over 8000 35000- 55,000 4850 + 20% of the amount over 35000 55000- 150,000 8850 + 30% of the amount over 55000 150000 – 200000 37350 + 35% of...
Mr. Hoosier has gathered all these data about his finances. Salary $159,000 Taxable interest $5600 Municipal Bond interest $20,000 Total Itemized deductions $9500 The personal exemption is $4700. The standardized deduction for a single filer is 5000. If Taxable Income is Then tax is: 0-8000 10% of the amount over 0 8000- 35,000 800 + 15% of the amount over 8000 35000- 55,000 4850 + 20% of the amount over 35000 55000- 150,000 8850 + 30% of the amount...
5. Ramon, a single taxpayer, has adjusted gross income for 2012 of $ 98,000 and his itemized deductions total $ 19,000. What taxable income will Ramon show in 2012? a. $ 73,550 b. $ 75,200 c. $ 92,550 d. $ 89,050 e. $ 70,050 6. Margaret and her sister support their mother and together provide 85 percent of their mother’s support. If Margaret provides 40% of her mother’s support: a. Her sister is the only one who can claim their...