ucationcomflowconnecthtml rk Saved Help Campbell a single ta

ucation.com/flow/connect.html rk Saved Help Campbell, a single taxpayer, earns $400,000 in taxable income and $2,000 in interest from an investment in State of New York bonds. (Use the U.S. tax rate schedule.) (Do not round intermediate calculations. Round Federal tox\" to 2 decimal places.) Required: a. How much federal tax will she owe? b. What is her average tax rate? c. What is her effective tax rate? d. What is her current marginal tax rate?

Solution

a. Campbell will owe $115,399.25 in federal income tax this year computed as follows:

= $46,643.75 + 33% * ($ 400,000 - $191,650)

= $ 115399.25

b.Campbell’s average tax rate is 28.85 percent.

Average tax rate= Total tax / Taxable income

= $115,399.25 / $400,000

= 28.85 %

c.Campbell’s effective tax rate is 28.76 percent.

Effective tax rate = Total tax / Total income

=$115,399.25 / ($400,000 + $2,000)

= 28.71 %

d. Campbell is currently in the 33 percent tax rate bracket.

^## Using Single Taxable Income Tax Brackets and Rates, 2017