Question

Campbell, a single taxpayer, earns $207,500 in taxable income and $13,000 in interest from an investment in State of New York bonds. (Use the U.S. tax rate schedule.) Required: a. How much federal tax will she owe? b. What is her average tax rate? c. What is her effective tax rate? d. What is her current marginal tax rate? Complete this question by entering your answers in the tabs below. Reg A Req B Reqc Reg D How much federal tax will she owe? (Do not round intermediate calculations. Round "Federal tax" to 2 decimal places.) Federal tax Req A ReqB >

Answer 1

Income tax is a liability of every individual to pay the government on the basis of their taxable income.

this is the obligation of the person as a citizen to pay for the nation to develop the country.

The calculations are made as per the 2019 tax rates and marginal rates.

Federal tax rate is calculated as follows:

Answer 1: Federal tax

= $46,075.25 + 37% (207,500 - 189,300)

= $52,809.25

The average rate at which one quantity is changing with respect to something else changing.

Average rate is calculated as follows:

Answer 2: Average rate

Average rate of tax = total tax / taxable income

= $52,809.25 / $207,500

= 25.45%

The effective tax rate is which would be paid by a taxpayer on his tax if it was charged at a constant rate rather than progressive. This is the average rate at which a business or individual is taxed on the earned income.

Effective tax rate is calculated as follows:

Answer 3: Effective tax rate

Effective tax rate = total tax / total income

= $52,809.25 / (207,500 + 13,000)

= 23.94%

The marginal tax rate is the percentage of tax applied to your income for each tax bracket in which you qualify. In essence, it is the percentage taken from your next dollar of taxable income above a pre-defined income threshold.

Marginal tax rate is calculated as follows:

Answer 4: Marginal tax rate

The current marginal tax rate is the 37% rate bracket.