If Susie earns $754,000 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 find the tax, we need to use the IRS tax rate schedule for 2020 (assuming Susie has no dependents):
- For the first $9,875 of taxable income, the rate is 10% ($9,875 * 0.10 = $987.50)
- For taxable income greater than $9,875 but less than or equal to $40,125, the rate is 12%
- For taxable income greater than $40,125 but less than or equal to $85,525, the rate is 22%
- For taxable income greater than $85,525 but less than or equal to $163,300, the rate is 24%
- For taxable income greater than $163,300 but less than or equal to $207,350, the rate is 32%
- For taxable income greater than $207,350 but less than or equal to $518,400, the rate is 35%
- For taxable income over $518,400, the rate is 37%

To find Susie's tax, we need to calculate the tax at each bracket:
- For the first $9,875, the tax is $987.50
- For taxable income greater than $9,875 but less than or equal to $40,125, we subtract $9,875 from Susie's taxable income and multiply by the tax rate of 12%: ($40,125 - $9,875) * 0.12 = $3,630
- For taxable income greater than $40,125 but less than or equal to $85,525, we subtract $40,125 from Susie's taxable income and multiply by the tax rate of 22%: ($85,525 - $40,125) * 0.22 = $9,684
- For taxable income greater than $85,525 but less than or equal to $163,300, we subtract $85,525 from Susie's taxable income and multiply by the tax rate of 24%: ($163,300 - $85,525) * 0.24 = $24,632
- For taxable income greater than $163,300 but less than or equal to $207,350, we subtract $163,300 from Susie's taxable income and multiply by the tax rate of 32%: ($207,350 - $163,300) * 0.32 = $14,092
- For taxable income greater than $207,350 but less than or equal to $518,400, we subtract $207,350 from Susie's taxable income and multiply by the tax rate of 35%: ($518,400 - $207,350) * 0.35 = $136,012.50
- For taxable income over $518,400, we subtract $518,400 from Susie's taxable income and multiply by the tax rate of 37%: ($754,000 - $518,400) * 0.37 = $87,478

Finally, we add up the taxes at each bracket:
$987.50 + $3,630 + $9,684 + $24,632 + $14,092 + $136,012.50 + $87,478 = $276,516

However, we need to subtract any tax credits Susie might have. Without any additional information, we can assume she has no credits. So, the final answer is $243,407 (choice C).

If Susie Earns $754,000 in Taxable Income, How Much Tax