Question

The tax rates are as shown. Your firm currently has taxable income of 89,400. How much...


The tax rates are as shown. Your firm currently has taxable income of 89,400.

How much additional tax will you owe if you increase your taxable income by 19,500?

Taxable Income Tax Rate
0-50,000 15%
50,001 - 75,000 25%
75,001 - 100,000 34%
100,001 - 335,000

39%

a. $133.00
b. $7,605.00
c. $7,160.00
d. $7,075.00

Homework Answers

Answer #1

When taxable income is 89400, the tax amounts will be:
50000*15%=7500
(75000-50000)*25%=25000*25%=6250
(89400-75000)*34%=14400*34%=4896

Total tax amount=7500+6250+4896=18646

If taxable income is increased by 19500, total taxable income will become 89400+19500=108900


Tax amounts will be:
50000*15%=7500
(75000-50000)*25%=25000*25%=6250
(100000-75000)*34%=25000*34%=8500
(108900-100000)*39%=8900*39%=3471

Total tax amount=7500+6250+8500+3471=25721

Additional tax=25721-18646=7075

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