If Susie earns $798,000 in taxable income, how much tax will she pay as a single taxpayer for 2020? (Use tax rate schedule.)

Question

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To calculate Susie's tax amount, we need to use the tax rate schedule for single taxpayers in 2020, which is as follows:

- 10% on taxable income from $0 to $9,875
- 12% on taxable income from $9,876 to $40,125
- 22% on taxable income from $40,126 to $85,525
- 24% on taxable income from $85,526 to $163,300
- 32% on taxable income from $163,301 to $207,350
- 35% on taxable income from $207,351 to $518,400
- 37% on taxable income over $518,400

To calculate the tax amount for Susie, we need to apply each tax rate to the corresponding taxable income bracket, and then sum up the results. Here's how we can do it:

- Susie has $798,000 in taxable income, which means:
- She owes 10% tax on the first $9,875, which is $988.
- She owes 12% tax on the income between $9,876 and $40,125, which is $3,572 [(40,125 - 9,876) x 0.12].
- She owes 22% tax on the income between $40,126 and $85,525, which is $11,852 [(85,525 - 40,126) x 0.22].
- She owes 24% tax on the income between $85,526 and $163,300, which is $27,409 [(163,300 - 85,526) x 0.24].
- She owes 32% tax on the income between $163,301 and $207,350, which is $12,473 [(207,350 - 163,301) x 0.32].
- She owes 35% tax on the income between $207,351 and $518,400, which is $145,680 [(518,400 - 207,351) x 0.35].
- She owes 37% tax on the income over $518,400, which is $490,943 [(798,000 - 518,400) x 0.37].

To get the total tax amount, we sum up all these amounts:

$988 + $3,572 + $11,852 + $27,409 + $12,473 + $145,680 + $490,943 = $692,917

Therefore, Susie will pay $692,917 in taxes as a single taxpayer for 2020. None of the choices are correct as $692,917 is not listed. However, the closest option is C)$259,687.

If Susie Earns $798,000 in Taxable Income, How Much Tax