HomeworkLib
Question

Kenneth pays taxes at the 12% federal income tax bracket level. His state also has a...

Kenneth pays taxes at the 12% federal income tax bracket level. His state also has a 6% tax on investment income, including interest earned. If Kenneth were to cash in a U.S. savings bond for $250, which he originally purchased for $50, how much will he pay in federal and state taxes? (Round answer to 2 decimal place, e.g. 52.20.) Group of answer choices

$42.00.

$24.00.

$63.00.

$45.00.

business   finance   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

Correct answer: $24.00

A U.S. saving bond is exempt from state or local taxes however, federal income tax apply to them.

Purchase price of bond = $50

Redeem price = $250

Federal tax rate = 12%

Tax amount = 250-50)*.12

Tax amount = $24.00

Hope it will help, please do comment if you need any further explanation. Your feedback would be highly appreciated.

0 0
Add a comment
Know the answer?
Add Answer to:
Kenneth pays taxes at the 12% federal income tax bracket level. His state also has a...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • An investor is in the 28% federal tax bracket, pays a 9% state tax rate and...

    An investor is in the 28% federal tax bracket, pays a 9% state tax rate and 4% in local income taxes. For this investor a municipal bond paying 6% interest is eqivalent to a corporate bond interest

  • Jennifer is in the 25% federal income tax bracket and the 3% state income tax bracket....

    Jennifer is in the 25% federal income tax bracket and the 3% state income tax bracket. If Jennifer purchases a municipal bond yielding 4.25%, what is her after-tax equivalent yield if the bond income is exempt from both federal and state taxes? 5.84% 5% 7.55% 8. A bond has a YTM of 6.5%, a modified duration of 16.9 years, a duration of 18 years and a 30 year maturity. By what percentage will the bond's price change if market interest...

  • You are considering an MMMF. The fund is taxable and pays 8.5% interest. If your top federal tax bracket is 25% and you live in a state that doesn't impose income taxes, what after-tax return wou...

    You are considering an MMMF. The fund is taxable and pays 8.5% interest. If your top federal tax bracket is 25% and you live in a state that doesn't impose income taxes, what after-tax return would you realize from this investment? Select one: a. 2.13% b. 7.44% c. 6.38% d. 8.25% O You are considering an MMMF. The fund is taxable and pays 8.5% interest. If your top federal tax bracket is 25% and you live in a state that...

  • 1. If Mrs. Smith buys an electric car and gets a federal income tax credit for...

    1. If Mrs. Smith buys an electric car and gets a federal income tax credit for $750, and her marginal tax bracket is 30 % , and she shows a tax liability before applying the savings from the credit of $1,000, she should be able to reduce her tax to... Group of answer choices $250 $775 $700 $175 2. If Mrs. Smith buys an electric car and gets a federal income tax deduction for $750, and her marginal tax bracket...

  • Ohe bookmak PSa 3-6 Calculate Federal (Wage-Bracket Method), State, and Local Income Tax Withholding For each...

    Ohe bookmak PSa 3-6 Calculate Federal (Wage-Bracket Method), State, and Local Income Tax Withholding For each employee listed, use the wage-bracket method to calculate federal income tax withholding. Then calculate both the state income tax withholding (assuming a state tax rate of 5.0% of taxable pay, with taxable pay being the same for federal and state income tax withholding), and the local income tax withholding. Refer to Appendix A, 2018 Federal Tax Tables in your textbook. NOTE: For simplicity, all...

  • An investment is in the 28% tax bracket and lives in a state with no income...

    An investment is in the 28% tax bracket and lives in a state with no income tax. He is trying to decide which of two bonds to purchase. One is a 7.5% corporate bond that is selling at par. The other is a municipal bond with a 5.25% coupon that is also selling at par. If all other features of these two bonds are comparable, which should the investor select? Why? Would your answer change if this were an in-state...

  • If the federal income tax rate is 21% and the state tax rate is 7% (and state taxes are deductible from federal taxes),...

    If the federal income tax rate is 21% and the state tax rate is 7% (and state taxes are deductible from federal taxes), what is the effective income tax rate? Choose the correct answer below. O A. The effective income tax rate is 21% O B. The effective income tax rate is 26.5%. OC. The effective income tax rate is 24.5%. OD. The effective income tax rate is 28%

  • 20. Assume you live in a state with a state income tax. The current Republican tax bill will get rid of the tax ded...

    20. Assume you live in a state with a state income tax. The current Republican tax bill will get rid of the tax deductibility of State and Local Taxes (SALT) when filing your Federal Income Taxes. This means you will no longer be able to deduct amount of the state income tax you pay when you file your federal income taxes. If you invest in a Treasury Bond that pays an annual coupon interest rate of 4% and you are...

  • Any help is appreciated - thank you! FEDERAL INCOME TAXES AND NAME NAME CONNECTICUT INDIVIDUAL INCOME TAX PROBLEM C...

    Any help is appreciated - thank you! FEDERAL INCOME TAXES AND NAME NAME CONNECTICUT INDIVIDUAL INCOME TAX PROBLEM COMPUTE THE 2018 CT TAX LIABILITY USING THE INFO BELOW. ASSUME MFJ FILING STATUS. AGE 66 DO NOT USE TAX FORMS, PREPARE USING SPREADSHEET SOFTWARE. ATTACH THIS SHEET TO RESPONSEI GROUPS OF TWO ARE ALLOWED, YOU MAY CONFER AMOUNG GROUPSI DUE DATE: 7esoy uls at the start of class-NO LATE SUBMISSIONS WILL BE ACCEPTED FEDERAL RETURN W-2 INCOME 85,000 SOC SeC 359y...

  • 1. Assume that you are in the 40% federal-plus-state marginal tax bracket and that capital gains...

    1. Assume that you are in the 40% federal-plus-state marginal tax bracket and that capital gains taxes are deferred until maturity. Assuming equal investment risk and a horizontal yield curve, rank the following investment opportunities on the basis of the effective annual yields: a.   A $100 par value perpetual preferred stock with an annual coupon of 12%, quarterly payments, and selling at $105. b.   A $1,000 par value, 20-year, non callable, semiannual bond with a coupon of 12% currently selling...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT