Question

1. Richard and Jennifer were married in 2003. Richard earned $43,000 in salary during the year. They also received $2,100 in interest from the credit union. They incurred $7,800 in itemized deductions during the year.

Please compute Richard and Jennifer’s income tax (before considering tax credits and prepayments) for 2018 using the Tax Rate Schedule.

Wages		$43,000
Interest income		2,100
Gross income		$45,100
Less: Standard deduction		24,000
	Taxable income	$21,100
Tax from tax rate schedule		$2,151

I got the answer already, but I don't understand how $2151 come from? What multiply by what?

Answer 1

As Richard and Jennifer are married since 2003, their filling status in 2018 is married filling jointly. The tax rates for the year 2018 for married filling jointly is as follows:-

Rate	Married Filling Jointly
10%	Up to $19,050
12%	$19,050 to $77,400
22%	$77,401 to $165,000
24%	$165,001 to $315,000
32%	$315,001 to $400,000
35%	$400,001 to $600,000
37%	over $600,000

As the taxable income computed above is $21,100 which is between $19,501 and $77,400, therefore their marginal tax rate is 12%. Thus the tax on their taxable income uis computed as follows:-

on first $19,050 @10% = $19,050*10% = $1,905

On next $2,050 ($21,100-$19,050) @12% = $2,050*12% = $246

Total tax on income = $1,905+$246 = $2,151