Question

Mitch, a single taxpayer, earns $100,000 in taxable income and $10,000 in interest from an investment in city of Birmingham Bonds. Using the U.S. tax rate schedule for year 2018, how much federal tax will he owe? (Tax rate schedule)

Answer 1

Answer:

The answer is: $18,289.50

Explanation:

The interest earned from the investment in Birmingham Bonds is not included in Mitch's gross income.

If Mitch earned $100,000, so he will fall under the fourth bracket for single filers.

He will have to pay $14,089.50 plus 24% of any income over $82,500.

taxes due = $14,089.50 + [($100,000 - $82,500) x 24%]

taxes due = $14,089.50 + $4,200 = $18,289.50