What is this couple\'s tax liability? -$39250 -$50000 -$42100 -$46700 What is th

Question

What is this couple's tax liability?

-$39250

-$50000

-$42100

-$46700

What is the average tax rate of this couple?

-17.72%

-19.6%

-16.7%

-18.46%

This tax is...?

- Flat

-Proportional

-Progressive

-Regressive

You are the tax accountant for a couple that earned a total of $250,000 in the past year. They have $15,000 in exclusions, $12,000 in exemptions and $24,000 in deductions. There are no long term capital gains, dividends or interest income from municipal bonds. Given the following tax table, what tax bracket are they in? Tax Taxable Income first $20,000 next $50,000 next $50,000 next $80,000 next $100,000 Everything else | 10% 15% 20% 25% 30% 35% O 25% O 35% 03096 O 20%

Explanation / Answer

1 Tax bracket they in is 25% Ans is A Explanation: Total income $250,000 Less: Exclusions          15,000 AGI       235,000 Less: Itemized deductions          24,000       211,000 Less: Exemptions          12,000 Taxable Income       199,000 2 What is this couple's tax liability? $39,250 Ans is A Explanation: Amount Rate Tax amount A B C = A x B 20000 10% 2000 50000 15% 7500 50000 20% 10000 79000 25% 19750 $        39,250 3 What is the average tax rate of this couple? Explanation: 39250/235000 16.70% Ans C Note: Average tax rate is defined as total taxes paid divided by Taxable income, If we go by this definition, it comes as 39250/199000 = 19.72%, but no option is given for that so I have adjusted this for (Total taxes paid /AGI) 4 This tax is? Progressive Ans is C Note: I have tried my best for correct solution, still need any further help, please ask in comment Thank You.

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