Question

Joel and Sara are filing Married fling jointly. Their taxable income is $340,000. What is their 2018 income tax? a. $70,179 b. $70,379 c. $60,179 d. $72,179

Answer 1

Answer: d. $72,179

Explanation:

For couples filing jointly in 2018, their tax rates are as follows:

10% for $0 to $19,050

12% for $19,051 to $77,400

22% for $77,401 to $165,000  

24% for $165,001 to $315,000

32% for $315,001 to $400,000

But income tax is progressive, so the tax rate only applies to the amount in that bracket above the basic tax. So their first income of $19050 is taxed at 10% and the next  58350 is taxed at 12% and so on.

For a taxable income of 340000 , the applicable tax is as follows:

19050 at 10% = 1905

58350 at 12% = 7002

87600 at 22% = 19272

150000 at 24% = 36000  

25000 at 32% = 8000

1905  + 7002  + 19272  + 36000 +  8000  = $72,179