Mary pays income tax according to the graduated schedule shown below.
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, 77,100 dollars, 160,850 dollars, 349,700 dollars. Column 2 is labeled but not over with entries 7,825 dollars, 31,850 dollars, 77,100 dollars, 160,850 dollars, 349,700 dollars, no limit. Column 3 is labeled the tax is with entries 10 percent of the amount of 0 dollars, 782 dollars and 50 cents plus 15 percent of the amount of 7,825 dollars, 4,386 dollars and 25 cents plus 25 percent of the amount of 31,850 dollars, 15,698 dollars and 75 cents plus 28 percent of the amount over 77,100 dollars, 39,148 dollars and 75 cents plus 33 percent of the amount of 160,850 dollars, 101,469 dollars and 25 cents plus 35 percent of the amount over 349,700 dollars.
If Mary’s taxable income is $68,562, how much income tax does she owe, rounded to the nearest dollar?
a.
$13,564
b.
$17,140
c.
$21,527
d.
$12,349
To find out how much income tax Mary owes, we need to determine which tax rate applies to her taxable income of $68,562.
Looking at the given income brackets, we see that Mary falls into the bracket between $31,850 and $77,100. The tax rate for this bracket is 25%.
Now, we calculate the amount of income tax for Mary's income within this bracket.
The amount within this bracket is $68,562 - $31,850 = $36,712.
The income tax for this amount is 25% * $36,712 = $9,178.
So, Mary owes $9,178 in income tax for this portion of her income.
Next, we need to find out if Mary's taxable income exceeds $77,100.
Mary's taxable income is $68,562, which is less than $77,100. Therefore, we do not need to calculate any additional tax for amounts exceeding $77,100.
Therefore, Mary owes a total income tax of $9,178.
Rounded to the nearest dollar, the answer is $9,178.
None of the given options match this answer. So, the given options do not correctly represent the income tax Mary owes for a taxable income of $68,562.
To calculate Mary's income tax, we need to determine which row her taxable income falls into in the graduated schedule.
Looking at the first column, we can see that Mary's taxable income of $68,562 is greater than $31,850 (row 3) but less than $77,100 (row 4).
Now, we can calculate the income tax for Mary using the information in column 3:
- The tax is 10% of the amount up to $7,825 (row 1), which is $782.50.
- Plus, 15% of the amount between $7,825 and $31,850 (row 2 to 3), which is ($31,850 - $7,825) * 0.15 = $4,386.25.
- Plus, 25% of the amount between $31,850 and $68,562, which is ($68,562 - $31,850) * 0.25 = $9,927.50.
Adding up these amounts, the total income tax Mary owes is $782.50 + $4,386.25 + $9,927.50 = $15,096.25.
Rounding to the nearest dollar, Mary owes $15,096.
Therefore, the correct answer is option a. $13,564.