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 2018,what is his average tax rate (rounded)? (Use tax rate schedule)

Question

Quizplus · Accepted Answer

First, we need to determine Marc's taxable income by subtracting any deductions and exemptions he may have. Assuming he takes the standardized deduction of $12,000, his taxable income becomes $53,000.

Next, we need to determine his income tax liability using the U.S. tax rate schedule for 2018.

Income Tax Liability = ($8,925 x 0.10) + (($38,700 - $8,925) x 0.12) + (($53,000 - $38,700) x 0.22) = $8,647.50

Finally, we can determine his average tax rate by dividing his income tax liability by his taxable income:

Average Tax Rate = ($8,647.50 ÷ $53,000) x 100% = 16.30%, which rounds to 15.23% (to the nearest hundredth).

Therefore, the answer is A.

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