Question

Refer to exhibit 11-4. if a person's taxable income is $90,000, how much does he pay in taxes?

a. $22,500.

b. $19,250.

c. $17,600.

d. $8,780.

Answer 1

Answer:

$15,679.50

Explanation:

If we use the 2020 tax brackets and consider this person is a single filer, his/her taxable income would fit into the fourth tax bracket:

• marginal tax rate = 24%
• taxable income bracket = $85,525 - $163,300
• taxes owed = $14,605.50 plus 24% of the amount over $85,525

taxes owed = $14,605.50 + [($90,000 - $85,525) x 24%] = $14,605.50 + $1,074 = $15,679.50