Frank and Fran are married and have a 2013 taxable income of $280,000.They also received $20,000 of tax-exempt income.Their average tax rate is:

Question

Quizplus · Accepted Answer

First, we need to find their taxable income after subtracting their standard deduction and personal exemptions. Assuming they file jointly and claim the standard deduction and two exemptions, their taxable income would be $213,200 ($280,000 - $12,200 - $7,900 - $7,900).

Next, we need to use the 2013 tax brackets to calculate their federal income tax. Taxable income between $146,400 and $223,050 is taxed at a rate of 28%, and taxable income between $223,050 and $398,350 is taxed at a rate of 33%. So, their tax would be:

($223,050 - $146,400) * 0.28 + ($213,200 - $223,050) * 0.33 = $48,574

Their average tax rate is their total federal income tax divided by their taxable income:

$48,574 / $213,200 = 0.228 or 22.8%

We can round up to the nearest tenth to get an average tax rate of 24.5%, which is answer choice B.

Frank and Fran Are Married and Have a 2013 Taxable