Teresa is getting ready to do her taxes. She is single and lives in San Francisco. Teresa earned $50,000 in 2011. She reviews the following table, which shows the IRS tax rates for a single taxpayer in 2011. On Annual Taxable Income... The Tax Rate Is... (Percent) Up to $8,500 10 From $8,500 to $34,500 15 From $34,500 to $83,600 25 From $83,600 to $174,400 28 From $174,400 to $379,150 33 Over $379,150 35 Based on the IRS table, Teresa calculates that her marginal tax rate is when her annual income is $50,000. Teresa calculates that she owes in income taxes for 2011. Teresa then calculates that her average tax rate is , based on the annual income level and the amount of taxes she owes for 2011. After figuring out what she owes in taxes in 2011, Teresa decides to ask an accountant for tax advice. The accountant claims that he has found a legal way to shelter $1,000 of taxable income from the federal government. The maximum amount that Teresa is willing to pay to learn this strategy and reduce her taxable income by $1,000 is . (Hint: Sheltering 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.)
Teresa is getting ready to do her taxes. She is single and lives in San Francisco. Teresa earned $50,000 in 2011. She reviews the following table, which shows the IRS tax rates for a single taxpayer in 2011. On Annual Taxable Income... The Tax Rate Is... (Percent) Up to $8,500 10 From $8,500 to $34,500 15 From $34,500 to $83,600 25 From $83,600 to $174,400 28 From $174,400 to $379,150 33 Over $379,150 35 Based on the IRS table, Teresa calculates that her marginal tax rate is when her annual income is $50,000. Teresa calculates that she owes in income taxes for 2011. Teresa then calculates that her average tax rate is , based on the annual income level and the amount of taxes she owes for 2011. After figuring out what she owes in taxes in 2011, Teresa decides to ask an accountant for tax advice. The accountant claims that he has found a legal way to shelter $1,000 of taxable income from the federal government. The maximum amount that Teresa is willing to pay to learn this strategy and reduce her taxable income by $1,000 is . (Hint: Sheltering 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.)
Chapter5: Gross Income: Exclusions
Section: Chapter Questions
Problem 55P
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Teresa is getting ready to do her taxes. She is single and lives in San Francisco. Teresa earned $50,000 in 2011. She reviews the following table, which shows the IRS tax rates for a single taxpayer in 2011.
|
On Annual Taxable Income...
|
The Tax Rate Is...
|
|---|---|
|
(Percent)
|
|
| Up to $8,500 | 10 |
| From $8,500 to $34,500 | 15 |
| From $34,500 to $83,600 | 25 |
| From $83,600 to $174,400 | 28 |
| From $174,400 to $379,150 | 33 |
| Over $379,150 | 35 |
Based on the IRS table, Teresa calculates that her marginal tax rate is when her annual income is $50,000.
Teresa calculates that she owes in income taxes for 2011.
Teresa then calculates that her average tax rate is , based on the annual income level and the amount of taxes she owes for 2011.
After figuring out what she owes in taxes in 2011, Teresa decides to ask an accountant for tax advice. The accountant claims that he has found a legal way to shelter $1,000 of taxable income from the federal government.
The maximum amount that Teresa is willing to pay to learn this strategy and reduce her taxable income by $1,000 is . (Hint: Sheltering 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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Step 1 Introduction
VIEWStep 2 1. Computation the marginal tax rate on the basis of the IRS table
VIEWStep 3 1. Answer
VIEWStep 4 2. Computation of tax liability in the year of 2011
VIEWStep 5 2.Answer
VIEWStep 6 3) Computation of average tax rate in the year of 2011
VIEWStep 7 3.Answer
VIEWStep 8 4) Computation of maximum tax liability amount should be paid
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ISBN:
9780357109731
Author:
Hoffman
Publisher:
CENGAGE LEARNING - CONSIGNMENT