Carol uses this graduated tax schedule to determine how much income tax she owes.
A 3-column table with 6 rows. Column 1 is labeled If taxable income is over with entries 0 dollars, 7,825 dollars, 31,850 dollars, 64,250 dollars, 97,925 dollars, 174,850 dollars. Column 2 is labeled but not over with entries 7,825 dollars, 31,850 dollars, 64,250 dollars, 97,925 dollars, 174,850 dollars, no limit. Column 3 is labeled the tax is with entries 10 percent of the amount over 0 dollars, 782 dollars and 50 cents plus 15 percent of the amount over 7,825 dollars, 4,386 dollars and 25 cents plus 25 percent of the amount over 31,850 dollars, 12,486 dollars and 25 cents plus 28 percent of the amount over 64,250 dollars, 21,915 dollars and 25 cents plus 33 percent of the amount over 97,925 dollars, 47,300 dollars and 50 cents plus 35 percent of the amount over 174,850 dollars.
If Carol’s taxable income is $89,786, how much income tax does she owe, to the nearest dollar?
a.
$25,140
b.
$12,654
c.
$19,636
d.
$37,626
To determine the income tax that Carol owes, we need to figure out which tax bracket her taxable income falls into and calculate the tax using the corresponding tax rate.
From the given table, we can see that:
- If her taxable income is over 0 dollars but not over 7,825 dollars, the tax rate is 10%.
- If her taxable income is over 7,825 dollars but not over 31,850 dollars, the tax rate is 15%.
- If her taxable income is over 31,850 dollars but not over 64,250 dollars, the tax rate is 25%.
- If her taxable income is over 64,250 dollars but not over 97,925 dollars, the tax rate is 28%.
- If her taxable income is over 97,925 dollars but not over 174,850 dollars, the tax rate is 33%.
- If her taxable income is over 174,850 dollars, the tax rate is 35%.
Since Carol's taxable income is $89,786, it falls into the tax bracket of over 64,250 dollars but not over 97,925 dollars. Therefore, the tax rate is 28%.
To calculate the tax, we need to multiply the taxable income in this bracket by the tax rate and add it to the fixed tax amounts in the lower brackets.
Tax = Fixed tax in the lower bracket + (Taxable income - Lower limit of the bracket) * Tax rate
Tax = 12,486.25 + ($89,786 - $64,250) * 0.28
Tax ≈ 12,486.25 + ($25,536) * 0.28
Tax ≈ 12,486.25 + $7,142.08
Tax ≈ $19,628.33
Therefore, Carol owes approximately $19,628 in income tax.
Rounded to the nearest dollar, the answer is c. $19,636.
To determine how much income tax Carol owes, follow these steps:
Step 1: Identify the taxable income range Carol falls into based on the table provided. Her taxable income is $89,786, which falls between $64,250 and $97,925.
Step 2: Calculate the tax owed for each range using the given tax rate.
Since Carol's taxable income is between $64,250 and $97,925, the tax rate is 28%. The calculation is:
Tax owed = 28% of (taxable income - $64,250)
= 28% of ($89,786 - $64,250)
= 28% of $25,536
= $7,153.28
Step 3: Add up the tax owed for each range to find the total tax owed.
Carol owes $7,153.28 in taxes based on her income.
Therefore, the answer is not provided in the options given. However, the correct answer based on the calculations would be $7,153 (rounded to the nearest dollar).