Question

mary pays income tax according to the graduated schedule shown below.
if taxable income is over...\tbut not over-\tthe tax is:
$0\t$7,825\t10% of the amount over $0
$7,825\t$31,850\t$782.50 plus 15% of the amount over 7,825
$31,850\t$77,100\t$4,386.25 plus 25% of the amount over 31,850
$77,100\t$160,850\t$15,698.75 plus 28% of the amount over 77,100
$160,850\t$349,700\t$39,148.75 plus 33% of the amount over 160,850
$349,700\tno limit\t$101,469.25 plus 35% of the amount over 349,700
if marys 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

Explanation:

Step1: Identify the tax - bracket

Mary's taxable income is $68,562$. Since $31,850<68,562 < 77,100$, we use the tax - rate formula for the bracket where the income is over $31,850$ but not over $77,100$. The tax formula for this bracket is $T = 4386.25+0.25\times(x - 31850)$, where $x = 68,562$.

Step2: Calculate the amount over the lower - bound of the bracket

The amount over $31,850$ is $68562−31850=36712$.

Step3: Calculate the tax

Substitute the amount over $31,850$ into the tax formula:
$T=4386.25 + 0.25\times36712$.
First, calculate $0.25\times36712 = 9178$.
Then, $T=4386.25+9178=13564.25\approx13564$.

Answer:

A. $13,564$