Question

1. Calculate the tax for a married couple with taxable income of $80,000, four-personal exemptions (self, spouse, and two children), and $23,000 of itemized deductions (State and real estate taxes $13,000, mortgage interest $10,000). How much would you owe in taxes under the old rates in 2017 and now in 2018 under the new Tax Cuts and Job Acts 2017 rates?

2. Calculate the tax for a married couple with taxable income of $350,000, four-personal exemptions (self, spouse, and two children), and $43,000 of itemized deductions (State and real estate taxes $23,000, mortgage interest $20,000). How much would you owe in taxes under the old rates in 2017 and now in 2018 under the new Tax Cuts and Job Acts 2017?

3. What is your opinion of how the Tax Cuts and Job Acts 2017 has impacted individuals with or without children at the different income levels?

Answer 1

1.

Your taxes are estimated at $2,339. This is 2.92% of your total income of $80,000. 2.92% would also be your average tax rate. Your income puts you in the 12% tax bracket. At higher incomes many deductions and many credits are phased out. This increases your tax bill and your marginal tax rate. With these phase outs, adding $1,000 to your income would result in a 12% marginal tax rate.

2.

Your taxes are estimated at $62,679. This is 17.91% of your total income of $350,000. 17.91% would also be your average tax rate. Your income puts you in the 32% tax bracket. At higher incomes many deductions and many credits are phased out. This increases your tax bill and your marginal tax rate. With these phase outs, adding $10,000 to your income would result in a 32.9% marginal tax rate.