Question

An individual with a single filing status has an annual income earning of $63,475. Use the 2018 Tax Tiers below to compute the total amount of tax owed by this individual

Answer 1

Answer:

$9,904

Explanation:

The question is incomplete as it did not contain the 2018 Tax Tiers. The 2018 Tax Tiers can be found on an article published by Forbes (https://www.forbes.com/sites/robertberger/2017/12/17/the-new-2018-federal-income-tax-brackets-rates/#37caf9e1292a). These tiers has been used to answer this question.

With an annual income of $63,475, total amount of tax owed is computed as follows.

Tax rate on income up to $9,525 is 10% = 10% * $9,525 = $952.50

Tax rate on additional income up to $38,700 is 12% = 12% * ($38,700 - $9,525) = $3,501

Tax rate on additional income up to $82,500 is 22% = 22% * ($63,475 - $38,700) = $5,450.50.

We used $63,475 instead of $82,500 in the 3rd bracket due to the limit of the individual's annual income.

Therefore, total tax owed = $952.50 + $$3,501 + $5,450.50 = $9,904.