Taxes:
In 2010 Jackie and Bob had a joint income of $156,000. They took a total deduction of $15,000 and had a tax credit of $2500. If they filed jointly, how much tax did they owe?
If tax is over: 137,300
But not over: 209,250
This amount: 26,687.50
Plus this %: 28%
Of the excess over: 137,300
26687.50+0.28*(150,000-137300) = 30243.5
I however am not sure how to now incorporate the credit of $2500 and the tax deduction of $15,000.
This line isn't right.
If tax is over: 137,300
They can't have a tax over 137,300 on an income of 156,000.
To incorporate the tax credit of $2500 and the tax deduction of $15,000 into the calculation, these amounts will be subtracted from the tax amount calculated previously.
First, calculate the initial tax amount using the provided tax brackets and rates:
Taxable income = Joint Income - Deduction
Taxable income = $156,000 - $15,000
Taxable income = $141,000
Next, calculate the initial tax amount using the tax brackets and rates:
Tax amount = $26,687.50 + 0.28 * (Taxable income - $137,300)
Tax amount = $26,687.50 + 0.28 * ($141,000 - $137,300)
Tax amount = $26,687.50 + 0.28 * $3,700
Tax amount = $26,687.50 + $1,036
Tax amount = $27,723.50
Now, subtract the tax credit of $2500 from the tax amount:
Tax amount after credit = $27,723.50 - $2500
Tax amount after credit = $25,223.50
Lastly, subtract the tax deduction of $15,000 from the tax amount after credit:
Taxes owed = Tax amount after credit - Deduction
Taxes owed = $25,223.50 - $15,000
Taxes owed = $10,223.50
Therefore, Jackie and Bob owe $10,223.50 in taxes after considering the tax credit of $2500 and the tax deduction of $15,000.