Question

QUESTION 1:

Imagine that you are married couple (filing jointly) and had a household taxable income of $100,000 in 2016. Here is the relevant tax table:

Which of the following statements is TRUE?

a) You pay 25% tax on your $100,000 income

b) You pay 15% income on the first $75,30169,000 and 25% on the remaining amount

c) You pay 10% income on the first $75.301 and 25% on the remaining amount

d) You pay 10% on the first $18,550 and 25% on the remaining amount of income

e)You pay 10% on the first $18,550 of income, 15% on the next $56,750, and 25% on the remaining income

QUESTION 2:

After determining a person (or household’s) “taxable income”, it is possible to calculate how much is owed (“tax liability”). But before the amount owed is fully determined, there are a few final things to consider. Which of the following describes an amount that is subtracted directly from the preliminary amount owed for low-income working parents AND can result in a full tax refund even if a person doesn’t owe any taxes?

a) Lifetime Learning credit

b) Child tax credit

c) Earned income credit

d) Health income credit

e) Elderly or Disable credit

QUESTION 3:

People talk about being pushed into the next (higher) bracket as though this is a bad thing. For individuals, $37,650 was the dividing line in 2016 between the 15% tax bracket, and the 25% bracket. Imagine that you’re single and, in 2015, your taxable income was $30,000, so you are used to thinking of yourself as being in the 15% tax bracket. But you are a such a good employee that your company gave you a $10,000 end-of-the-year bonus. You are worried, however, that the raise puts you in higher tax bracket. How much of your total income will be taxed at 25% rate?

If Taxable Income Is Between:	The Tax Due Is:
0 - $9,275	10% of taxable income
$9,276 - $37,650	$927.50 + 15% of the amount over $9,275
$37,651 - $91,150	$5,183.75 + 25% of the amount over $37,650
$91,151 - $190,150	$18,558.75 + 28% of the amount over $91,150
$190,151 - $413,350	$46,278.75 + 33% of the amount over $190,150
$413,351 - $415,050	$119,934.75 + 35% of the amount over $413,350
$415,051 +	$120,529.75 + 39.6% of the amount over $415,050

a) None of it

b) $2,350

c) $22,450

d) $30,000

e) All $40,000

Answer 1

1) According to Federal tax rates if a Married couple are filing jointly than they come under tax rates like

0 - 18550$ at 10% tax

18550 - 75300$ at 15%

75300 - 151900$ at 25% and ----------- etc

Now from the above question as the amount of tax is 100000$

For the first 18500 they pay tax at 10% the next 56750$ [18550 - 75300$ ] they pay tax at 15% and remaining amount at 25% intrest rate.

Answer: E

2) Income tax that is paid which can be fully refunded is for Health income credit where families with low income cannont pay the amount for health in private hosipatils. So government will give health taxinsurance which full income tax paid will credited.

Answer: d

3) Total amount taxable is 40000$

0- 9275$ is tax at 10%

9276 - 37650$ at 15% tax rate

37656 - 40000 at 25% tax rate

Which means only 2350$ is taxed at 25% tax rate.

Answer:B