Andrea is single and has a 2018 taxable income of $199,800. She also received $15,000 of tax-exempt income. Andrea's average tax rate is:

Question

Quizplus · Accepted Answer

First, we have to calculate Andrea's taxable income by subtracting the tax-exempt income from her total income.
Taxable Income = $199,800 - $15,000 = $184,800

Next, we have to find the tax liability using the tax brackets for single filers in 2018:
- The first $9,525 is taxed at a rate of 10% = $952.50
- The next $29,175 ($39,700 - $9,525) is taxed at a rate of 12% = $3,501
- The next $43,800 ($83,500 - $39,700) is taxed at a rate of 22% = $9,636
- The next $50,400 ($133,900 - $83,500) is taxed at a rate of 24% = $12,096
- The next $3,900 ($137,800 - $133,900) is taxed at a rate of 32% = $1,248

Total Tax Liability = $952.50 + $3,501 + $9,636 + $12,096 + $1,248 = $27,433.50

Finally, we can calculate the average tax rate by dividing the tax liability by the taxable income:
Average Tax Rate = ($27,433.50 / $184,800) x 100% = 14.83%

Therefore, the closest answer choice is C) 22.8%

Andrea Is Single and Has a 2018 Taxable Income of $199,800