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Fundamentals of Financial Manageme...

14th Edition
Eugene F. Brigham + 1 other
ISBN: 9781285867977

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BuyFindarrow_forward

Fundamentals of Financial Manageme...

14th Edition
Eugene F. Brigham + 1 other
ISBN: 9781285867977
Textbook Problem

PERSONAL TAXES Joe and Jane Keller are a married couple who file a joint income tax return, where the tax rates are based on the tax tables presented in the chapter. Assume that their taxable income this year was $165,000.

  1. a. What is their federal tax liability?
  2. b. What is their marginal tax rate?
  3. c. What is their average tax rate?

a.

Summary Introduction

To Determine: The federal tax liability.

Introduction: A tax rate is the percentage of the total estimation of an asset, property or incomes that is to be paid to the government in terms of tax. The federal tax liability is the amount that is owed to the IRS for taxes that are unpaid.

Explanation

Determine the federal tax liability

The tax amount that is payable for $165,000 is $28,925. The amount of $165,000 comes under the tax slab of $148,850-$226,850 with a marginal tax rate of 28%.

FederalTaxLiability=[(TaxRate×(TaxableIncomeTaxAmount

b.

Summary Introduction

To Determine: The marginal tax rate.

c.

Summary Introduction

To Determine: The average tax rate.

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