Question

Marc, a single taxpayer, earns $60,000 in taxable income and $5,000 in interest from an investment in city of Birmingham bonds. Using the U.S. tax rate schedule for 2019, what is his average tax rate (rounded)

Answer 1

Answer:

Average tax rate = 15.0975%

Explanation:

U.S. tax rate schedule for 2019

($39,475 to $84,200) = $4,543 + (22% over $39,475)

Total income = $65,000

Taxable income = $60,000

$5,000 are not include in taxable income .

Computation:

Tax liability($39,475 to $84,200) = $4,543 + ($60,000 - $39,475) × 22%

Tax liability($39,475 to $84,200) = $4,543 + $4,515.5

Tax liability($39,475 to $84,200) = $9,058.5

Average tax rate = $9,058.5 / $60,000

Average tax rate = 0.150975

Average tax rate = 15.0975%