Question

Alice and Alan have been married for five years and have two children. In 2018, Alice had wages from her programming job of $65,000 and Alan made $20,000 as a part-time accountant. Alice also got an additional $5,000 year-end bonus paid to her on December 24. In 2018, they contributed $10,000 to Alice’s traditional 401k, and $4,000 to Alan’s traditional IRA. Assuming a taxable income of $80,000, what is Alice and Alan’s federal marginal tax rate?

Answer 1

22%

Step-by-step explanation:

since taxable income is gross income - all possible deductions and and exemptions, we need to calculate Alice and Alan's tax bracket as married filing jointly for 2018.

The following table shows some of the tax brackets that were valid for 2018:

Rate Individuals Married Filing Jointly

10% Up to $9,525 Up to $19,050

12% $9,526 to $38,700 $19,051 to $77,400

22% $38,701 to $82,500 $77,401 to $165,000

24% $82,501 to $157,500 $165,001 to $315,000

32% $157,501 to $200,000 $315,001 to $400,000

We cannot determine their tax brackets if they wanted to file separately since we are only given a combined taxable income amount.