Question

If an individual's adjusted gross income (AGI) is $60,000, they have $5,000 in

itemized deductions, $7,500 in standard deductions, and $2,500 in tax credits.
How much will be paid to the IRS if the income tax rate table is as follows:
Taxable income
(USD)
0-$11,000
$11,001 - $44,725 12%
Tax rate (%)
$44,726-$95,375 22%
$182,101 -
$231,250
10%
$95,376-$182,100 24%
$231,251-
$578,125
Over $578,126
32%
35%
37%

Answer 1

The individual will pay $7,950 to the IRS.

Calculating the individual's IRS payment:

Adjusted gross income (AGI) = $60,000

Total deductions = $5,000 (itemized) + $7,500 (standard) = $12,500

Taxable income = AGI - deductions = $60,000 - $12,500 = $47,500

Since the taxable income falls within the range of $44,726 - $95,375, the applicable tax rate is 22%.

Income tax = taxable income * tax rate = $47,500 * 0.22 = $10,450

Tax credits reduce the income tax liability directly. In this case, the individual has $2,500 in tax credits.

Final payment = income tax before credits - tax credits = $10,450 - $2,500 = $7,950

Therefore, the individual will pay $7,950 to the IRS.