Question

This table shows the 2014 tax brackets for single taxpayers.

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Single Taxpayers (2014)

Taxable Income Between: Tax Rate

$0 l $9,075 l 10%
$9,075 l $36,900 l 15%
$36,900 l $89,350 l 25%
$89,350 l $186,350 l 28%
$186,350 l $405,100 l 33%
$405,100 l $406,750 l 35%
$406,750 l and above l 39.6%

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Phung works as a pharmacist in Tampa, Florida. Her income is $116,200 a year.

Which statements about Phung’s income and tax situation are correct? Check all that apply.

1.) Phung will pay 28% of her total income in state taxes.

2.) The first $9,075 she makes each year will be taxed at 10%.

3.) Portions of Phung’s income will be taxed at 10%, 15%, 25%, and 28%.

4.) Phung will pay 28% of her total income in federal taxes.

5.) After $36,000, Phung’s taxable income will experience the greatest tax bracket increase.

(Economics)

Answer 1

The correct statements about Phung's income and tax situation are that the first $9,075 of her income will be taxed at 10%, and portions of her income will be taxed at various rates, up to her marginal tax rate of 28%. After $36,900, her taxable income experiences the greatest bracket increase to 25%. Phung's entire income is not taxed at 28%, and she will not pay state taxes in Florida.

Step-by-step explanation:

The student's question revolves around understanding how Phung's income as a pharmacist would be taxed based on the 2014 tax brackets for single taxpayers. According to the information given, Phung has a taxable income of $116,200 annually.

Based on the tax brackets, the correct statements about Phung's income and federal tax situation are:

The other statements regarding state taxes and her entire income being taxed at 28% are incorrect. Florida does not have a state income tax, thus Phung will not pay any state income tax. Also, since U.S. federal income tax is progressive, not flat, Phung will not pay a flat rate of 28% on her entire income, but rather on the income within the range that is subject to 28% tax rate.

Answer 2

B. The first $9,075 she makes each year will be taxed at 10%.

C. Portions of Phung’s income will be taxed at 10%, 15%, 25%, and 28%.

E. After $36,000, Phung’s taxable income will experience the greatest tax bracket increase.