Question

Chuck, a single taxpayer, earns $69,000 in taxable income and $27,100 in interest from an investment in City of Heflin bonds. (Use the U.S tax rate schedule.) Required: How much federal tax will he owe

Answer 1

Answer: $10,970

Step-by-step explanation:

I have attached the US Tax rate Schedule to this question.

Note that the Interest Earned from the investment are Tax Free because it is from an Municipal bond and those are tax free.

The only figure to calculate tax on is therefore the income of $69,000.

According to the Schedule. If an individual makes between $40,126 and $85,525, they are to pay $4,617.50 plus 22% of the income over $40,125.

That means then that Chuck's tax rate is,

= 4,617.50 + 22% * ( 69,000 - 40,125)

= 4,617.50 + 22% * 28,875

= $10,970

He owes $10,970 in Federal Taxes