Question

Miquel and Anna Green have been married for almost five years and have no children. They both have good jobs, with a combined income of $84,000. They enjoy living in a rental near downtown but hope to eventually buy a home. Based on their current circumstances, they have decided to use the standard deduction of $24,000 allowed for a married couple when paying their federal income tax.

Use the following tax table to calculate the amount of federal income tax they would be responsible to pay on their income. Show your calculations in completing the exercise and answer the questions below.

Answer 1

Miquel and Anna Green would be responsible for paying $15,000 in federal income tax on their $60,000 income.

To calculate the federal income tax amount for Miquel and Anna Green, we need to determine their taxable income. Their combined income is $84,000 and they are using the standard deduction of $24,000. Therefore, their taxable income is $84,000 - $24,000 = $60,000.

Next, we need to find the tax rate that applies to their taxable income. Looking at the tax table, we can see that their taxable income falls into the range of $32,550 to $78,850, which corresponds to a marginal tax rate of 25%.

To calculate the federal income tax, we multiply their taxable income by the marginal tax rate. For $60,000 income, the tax amount would be $60,000 x 0.25 = $15,000.