Based on the IRS table, Neha calculates that her marginal tax rate is Neha calculates that she owes approximately 10 % / 12% / 17% / 20 % / 23% / 30% Neha then calculates that her average tax rate is approximately 2020. when her annual income is $110,000. $12,336/$13,601/$16,243/$17,231/$22,000 in income taxes for 2020. 10.66%/13.66 % /15.66% / 18.66 % /20% based on the annual income level and the amount of taxes she owes for After figuring out what she owes in taxes in 2020, Neha decides to ask an accountant for tax advice. The accountant claims that he has found a legal way to shelter $2,000 of taxable income from the federal government. $0/$313/$400/$2,000 . (Hint: Sheltering The maximum amount that Neha is willing to pay to learn this strategy and reduce her taxable income by $2,000 is some income means finding a legal way to avoid being charged income tax on that income. For example, someone who has $50,000 in income and shelters $10,000 pays income tax on only $40,000.)
Based on the IRS table, Neha calculates that her marginal tax rate is Neha calculates that she owes approximately 10 % / 12% / 17% / 20 % / 23% / 30% Neha then calculates that her average tax rate is approximately 2020. when her annual income is $110,000. $12,336/$13,601/$16,243/$17,231/$22,000 in income taxes for 2020. 10.66%/13.66 % /15.66% / 18.66 % /20% based on the annual income level and the amount of taxes she owes for After figuring out what she owes in taxes in 2020, Neha decides to ask an accountant for tax advice. The accountant claims that he has found a legal way to shelter $2,000 of taxable income from the federal government. $0/$313/$400/$2,000 . (Hint: Sheltering The maximum amount that Neha is willing to pay to learn this strategy and reduce her taxable income by $2,000 is some income means finding a legal way to avoid being charged income tax on that income. For example, someone who has $50,000 in income and shelters $10,000 pays income tax on only $40,000.)
Economics (MindTap Course List)
13th Edition
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Roger A. Arnold
Chapter11: Fiscal Policy And The Federal Budget
Section: Chapter Questions
Problem 4WNG
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Transcribed Image Text:Neha is getting ready to do her taxes. She is single and lives in Denver. Neha earned $110,000 in 2020. She reviews the following table, which shows the
IRS tax rates for a single taxpayer in 2020.
On Annual Taxable Income...
Up to $9,875
From $9,875 to $40,125
From $40, 125 to $85,525
From $85,525 to $163,300
From $163,300 to $207,500
From $207,500 to $518,400
The Tax Rate Is...
(Percent)
10
12
17
20
23
30
Transcribed Image Text:Based on the IRS table, Neha calculates that her marginal tax rate is
Neha calculates that she owes approximately
10%/12%/17% / 20 % / 23%/30%
Neha then calculates that her average tax rate is approximately
2020.
when her annual income is $110,000.
$12,336/$13,601/$16,243/$17,231/$22,000
in income taxes for 2020.
10.66%/13.66%/15.66%/18.66%/20%
based on the annual income level and the amount of taxes she owes for
After figuring out what she owes in taxes in 2020, Neha decides to ask an accountant for tax advice. The accountant claims that he has found a legal way
to shelter $2,000 of taxable income from the federal government.
$0/$313/$400/$2,000
(Hint: Sheltering
The maximum amount that Neha is willing to pay to learn this strategy and reduce her taxable income by $2,000 is
some income means finding a legal way to avoid being charged income tax on that income. For example, someone who has $50,000 in income and
shelters $10,000 pays income tax on only $40,000.)
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