Question

PERSONAL TAXES

Susan and Stan Britton are a married couple who file a joint income tax return, where the tax rates are based on the tax table 3.5. Assume that their taxable income this year was $264,000. Round your answers to two decimal places.

1. What is their federal tax liability?

   $  

2. What is their marginal tax rate?

       %

3. What is their average tax rate?

       %

Answer 1

As Susan and Stan Britton filling joint income tax return, so;

(i) Federal tax liability = $51577.5 + ($33550 * 33 / 100) = $62649

Note: As per given tax slab $51577.5 is base tax for this taxable income and for excess amount tax will be levied at the rate of 33% (264000 – 230450) = $ 33550 * 33 / 100 = $11071.5, Thus total tax liability = ($51577.5 + $11071.5) = $62649

(ii) Marginal tax rate = For Susan and Stan Britton Rate of marginal tax will be 33%

(iii) Average tax rate = For Susan and Stan Britton, Average tax rate will be $62649 *100 / $264000 = 23.73 %