Question

Use the marginal tax rate chart to answer the question.

---Marginal Tax Rate Chart---
Tax Bracket Marginal Tax Rate
$0–$10,275 10%
$10,276–$41,175 12%
$41,176–$89,075 22%
$89,076–$170,050 24%
$170,051–$215,950 32%
$215,951–$539,900 35%
> $539,901 37%

Determine the amount of taxes owed on a taxable income of $38,520.
$3,852.00
$4,416.90
$4,622.40
$8,474.40

Answer 1

(b) $4416.90

Explanation:

You want the tax on $38,520, using the given tax table.

Tax table

These tax tables tell you tax owed on the portion of the taxable income that falls within each bracket. This means you owe 10% on the first $10275, and 12% on amounts over that.

Tax

The tax can be computed as ...

tax = 10%(10275) +12%(38520 -10275)

= 12%(38520) -2%(10275) = 4622.40 -205.50

= 4416.90

The tax owed is $4416.90, matching choice B.

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