Question

For a single person in 2018, adjusted gross income (income after deductions) under $9,525 was taxed at 10%. Income over $9,525 but under $38,700 was taxed at 12%. How much tax would a person with an adjusted gross income of $21,500 pay, to the nearest dollar?

Answer 1

The total tax owed on an adjusted gross income of $21,500 is calculated by applying progressive tax rates, resulting in approximately $2,390.

Step-by-step explanation:

The student is asking how to calculate the total tax owed on an adjusted gross income of $21,500, based on the 2018 U.S. federal tax brackets for a single person. To answer this, we need to apply the progressive tax rates to the income within each bracket. Here is a step-by-step calculation:

1. First, calculate the tax on income up to the first tax bracket's threshold. Since $9,525 is taxed at 10%, the tax owed on this portion is $9,525 * 10% = $952.50.
2. Next, subtract the first bracket's threshold from the total income to find the amount of income that falls into the second bracket. That is $21,500 - $9,525 = $11,975.
3. For the second bracket, apply the 12% tax rate to the remaining income. So, the tax owed on this portion is $11,975 * 12% = $1,437.
4. Add the two amounts together to get the total tax owed: $952.50 + $1,437 = $2,389.50.

Therefore, the total tax owed for an individual with an adjusted gross income of $21,500 is approximately $2,390 to the nearest dollar.