Question

Please answer questions that I filled in also. Thank you.

Calculating Taxable Income Rate Taxable income $1 - $9,075 $9,076 - $36,900 $36,901 - $89,350 $89,351 - $186,350 $186,351 - $405,100 $405,101 - $406,750 Over $406,751 10.0% 15.0% 25.0% 28.0% 33.0% 35.0% 9.6% Using the tax table shown at the left, compute the tax liability for each individual in the scenarios presented, rounding the liability to the nearest dollar. In addition, use the dropdown lists to identify the marginal tax rate and average tax rate for both Jen and Jim. 3 Jim's Tax Scenario Jen's Tax Scenario Jim is a young professional who lives in downtown Chicago. He has taxable income of $61,000 as a medical sales rep for Diusitech Inc. Jen is a young professional who lives in downtown St. Louis. She has taxable income of $90,735 as an advertising account executive for Fitcom Corporation. What is Jim's tax liability? What is Jen's tax liability? What is Jim's top marginal tax rate? 25.00% What is Jen's top marginal tax rate? 28.00% What is Jen's average tax rate? What is Jim's average tax rate? 18.21%

Answer 1

Calculation of tax liability
Jim				Jen
taxable income	tax rate	tax liability		taxable income	tax rate	tax amount
(a)	(b)	(a*b)		(a)	(b)	(a*b)
9,075	10%	907.50		9,075	10%	907.50
27,824	15%	4,173.60		27,824	15%	4,173.60
24,101	25%	6,025.25		52,449	25%	13,112.25
61,000		11,106.35		1,387	28%	388.36
				90,735		18,581.71
Calculation of average tax rate
Jim	11106.35*100			Jen	18581.71*100
	61,000				90,735
=	18.21%				20.48%