Math  /  Data & Statistics

Questionion list
Use the 2021 marginal tax rates to compute the tax owed by the following individual. married filing separately with a taxable income of \$122,000 stion 11 (i) Click the icon to view the 2021 marginal tax rates.
2021 Marginal Tax Rates \begin{tabular}{|l|c|c|c|c|} \hline \multicolumn{1}{|c|}{ 2021 Marginal Tax Rates and Standard Deductions } \\ \hline & \begin{tabular}{c} Unmarried, \\ divorced, or \\ legally separated \end{tabular} & \begin{tabular}{c} Married and each \\ partner files a \\ separate tax return \end{tabular} & \begin{tabular}{c} Married and both \\ partners file a \\ single tax return \end{tabular} & \begin{tabular}{c} Unmarried and paying more \\ than half the cost of \\ supporting a child or parent \end{tabular} \\ \hline Tax Rate & \multicolumn{1}{|c|}{ Single } & \begin{tabular}{c} Married Filing \\ Separately \end{tabular} & \begin{tabular}{c} Married \\ Filing Jointly \end{tabular} & \multicolumn{1}{c|}{\begin{tabular}{c} Head of \\ Household \end{tabular}} \\ \hline 10%10 \% & up to $9950\$ 9950 & up to $9950\$ 9950 & up to $19,900\$ 19,900 & up to $14,200\$ 14,200 \\ \hline 12%12 \% & $9951\$ 9951 to $40,525\$ 40,525 & $9951\$ 9951 to $40,525\$ 40,525 & $19,901\$ 19,901 to $81,050\$ 81,050 & $14,201\$ 14,201 to $54,200\$ 54,200 \\ \hline 22%22 \% & $40,526\$ 40,526 to $$86,375\$ \$ 86,375 & $40,526\$ 40,526 to $86,375\$ 86,375 & $81,051\$ 81,051 to $172,750\$ 172,750 & $54,201\$ 54,201 to $86,350\$ 86,350 \\ \hline 24%24 \% & $86,376\$ 86,376 to $164,925\$ 164,925 & $86,376\$ 86,376 to $164,925\$ 164,925 & $172,751\$ 172,751 to $329,850\$ 329,850 & $86,351\$ 86,351 to $164,900\$ 164,900 \\ \hline 32%32 \% & $164,926\$ 164,926 to $209,425\$ 209,425 & $164,926\$ 164,926 to $209,425\$ 209,425 & $329,851\$ 329,851 to $418,850\$ 418,850 & $164,901\$ 164,901 to $209,400\$ 209,400 \\ \hline 35%35 \% & $209,426\$ 209,426 to $523,600\$ 523,600 & $209,426\$ 209,426 to $314,150\$ 314,150 & $418,851\$ 418,851 to $628,300\$ 628,300 & $209,401\$ 209,401 to $523,600\$ 523,600 \\ \hline 37%37 \% & more than $523,600\$ 523,600 & more than $314,150\$ 314,150 & more than $628,300\$ 628,300 & more than $523,600\$ 523,600 \\ \hline \begin{tabular}{l} Standard \\ Deduction \end{tabular} & $12,550\$ 12,550 & & & \\ \hline \end{tabular}

Studdy Solution

STEP 1

What is this asking? How much tax does a person filing separately owe if their taxable income is $122,000\$122,000? Watch out! Don't forget, we need to use the tax *brackets*!
It's not a single multiplication!

STEP 2

1. Find the correct tax brackets
2. Calculate the tax for each bracket
3. Sum up the taxes

STEP 3

We're looking at "Married Filing Separately" with a taxable income of $122,000\$122,000.

STEP 4

Let's **locate** the relevant tax brackets from the table.
They are: * 10% on income up to $9,950\$9,950 * 12% on income between $9,951\$9,951 and $40,525\$40,525 * 22% on income between $40,526\$40,526 and $86,375\$86,375 * 24% on income between $86,376\$86,376 and $164,925\$164,925.

STEP 5

Since $122,000\$122,000 falls within the range of $86,376\$86,376 to $164,925\$164,925, we'll use the first four brackets to calculate the total tax.

STEP 6

$9,9500.10=$995 \$9,950 \cdot 0.10 = \$995

STEP 7

($40,525$9,951)0.12=$30,5740.12=$3,668.88 (\$40,525 - \$9,951) \cdot 0.12 = \$30,574 \cdot 0.12 = \$3,668.88 Remember, we subtract the lower bound of the bracket because we've already taxed that income in the previous bracket.

STEP 8

($86,375$40,526)0.22=$45,8490.22=$10,086.78 (\$86,375 - \$40,526) \cdot 0.22 = \$45,849 \cdot 0.22 = \$10,086.78 Again, we subtract the lower bound because that income has already been taxed.

STEP 9

($122,000$86,376)0.24=$35,6240.24=$8,549.76 (\$122,000 - \$86,376) \cdot 0.24 = \$35,624 \cdot 0.24 = \$8,549.76 We use our **actual income** $122,000\$122,000 as the upper bound this time, since it's less than the upper limit of this bracket.
We still subtract the lower bound!

STEP 10

Now, let's **add up** the taxes from each bracket: $995+$3,668.88+$10,086.78+$8,549.76=$23,300.42 \$995 + \$3,668.88 + \$10,086.78 + \$8,549.76 = \$23,300.42

STEP 11

The total tax owed is $23,300.42\$23,300.42.

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