Leonardo earns $190,000 of taxable income. He also has $16,250 in city of Tulsa

Question

Leonardo earns $190,000 of taxable income. He also has $16,250 in city of Tulsa bonds. His wife, Theresa, earns $70,000 of taxable income. How much money would Leonardo and Theresa save if they file jointly instead of separately for year 2017? (Use tax rate schedule)

Multiple Choice

Nothing

$2530.25

$2708.00

$8,320.25

None of the choices are correct.

2017 Tax Rate Schedule Schedule X-Single Schedule Z-Head of Household If taxable income is over: If taxable income is over. But not But not over: $ 13,350 $ 50,800 over The tax is: The tax is: 10% of taxable income $ 1 ,335.00 plus 1 5% of the excess over $13,350 $6,952.50 plus 25% of the excess over $50,800 $27,052.50 plus 28% of the excess over $131,200 $49,816.50 plus 33% of the excess over $212,500 $117,202.50 plus 35% of the excess over $416,700 $ 1 26,950.00 plus 39.6% of the excess over $444,550 $ 10% of taxable income $932.50 plus 15% of the excess over $9,325 $5.226.25 plus 25% of the excess over $37,950 $ 1 8.7 13.75 plus 28% of the excess aver $91,900 $ 46,643.75 plus 33% of the excess over $191,650 $ 1 2091 0.25 plus 35% of the excess over $416,700 $12 1,505.25 plus 39.6% of the excess cver $418,400 0 9,325 0 $ 9,325 $37,950 $ 9 1 ,900 $ 1 9 1 ,650 $41 6,700 $418,400 $ 37,950 $ 91,900 $ 1 9 1 ,650 $41 6,700 $41 8,400 $ 13,350 $ 50,800 $ 1 3 1,200 $212,500 $416,700 $444,550 $ 1 3 1,200 $21 2,500 $416,700 $444,550 Schedule Y-1-Married Flling Jointly or Qualifying Widow(er) Schedule Y-2-Married Filing Separately If taxable income is over. But not If taxable income is over: But not over: The tax is: over: The tax is: 0 $ 9,325 10% of taxable income $ 1.865.00 plus 15% of the excess over $18,650 $ 10.452.50 plus 25% of the excess over $75,900 $29,752.50 plus 28% of the excess over $153,100 $52.222.50 plus 33% of the excess cver $233,350 $112,728.00 plus 35% of the excess aver $416,700 $13 1 ,628.00 plus 39.6% of the excess over $470,700 $ 9,325 $ 37,950 $ 76,550 $116,675 $208,350 $235,350 $ 37,950 $ 76,550 $116,675 $208,350 $235,350 10% of taxable income $932.50 plus 15% of the excess over $9,325 $5,226.25 plus 25% of the excess over $37,950 $14,876.25 plus 28% of the excess over $76,550 $26,1 11.25 plus 33% of the excess over $116,675 $56,364.00 plus 35% of the excess over $208,350 $65,814.00 plus 39.6% of the excess over $235,350 0 $ 18,650 $ 18,650 $ 75,900 $153,100 $233,350 $416,700 $470,700 $ 75,900 $153,100 $233,350 $416,700 $470,700

Explanation / Answer

Answer b. $2,530.25 File Separate Returns Leonardo Taxable Income = $190,000 (Income from Cisty of Tulsa Bonds are exempt from Tax) Tax on Leonardo Income = $26,111.25 + ($190,000 - 116,675) X 33% Tax on Leonardo Income = $26,111.25 + $24,197.25 Tax on Leonardo Income = $50,308.50 Theresa Taxable Income = $70,000 Tax on Theresa Income = $5,226.25 + ($70,000 - $37,950) X 25% Tax on Theresa Income = $5,226.25 + $8,012.50 Tax on Theresa Income = $13,238.75 Total Tax Payble = Tax on Leonardo Income + Tax on Theresa Income Total Tax Payble = $50,308.50 + $13,238.75 Total Tax Payble = $63,547.25 File Jointly Total Taxable Income = $190,000 + $70,000 Total Taxable Income = $260,000 Tax Payble = $52,222.50 + ($260,000 - $233,350) X 33% Tax Payble = $52,222.50 + $8,794.50 Tax Payble = $61,017.00 Difference in Tax PAyable = $63,547.25 - $61,017.00 Difference = $2,530.25

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