Marc,a single taxpayer,earns $60,000 in taxable income and $5,000 in interest from an investment in city of Birmingham Bonds.Using the U.S.tax rate schedule for year 2013,what is his effective tax rate (rounded) ?

Question

Quizplus · Accepted Answer

- First, we need to determine Marc's total taxable income: 
   $60,000 (taxable income) + $5,000 (interest) = $65,000 (total taxable income) 
- Next, we need to use the tax rate schedule for 2013 to find the amount of tax Marc owes:

$8,925 x 10% = $892.50
      ($36,250 - $8,925) x 15% = $4,031.25
      ($65,000 - $36,250) x 25% = $7,437.50 
      Total tax owed: $892.50 + $4,031.25 + $7,437.50 = $12,361.25

- Finally, we can calculate Marc's effective tax rate by dividing his total tax owed by his total taxable income:

$12,361.25 / $65,000 = 0.190, which is equivalent to 19.0% 
- Because we are asked to round to the nearest hundredth of a percent, we round 0.190 to 0.188, which is equivalent to 18.8%. 
- The closest answer choice to 18.8% is B: 16.81%, so that is our best answer.

Marc,a Single Taxpayer,earns $60,000 in Taxable Income and $5,000 in Interest