Question

carol uses this graduated tax schedule to determine how much income tax she owes. if taxable income is over - but not over - the tax is: $0 $7,825 10% of the amount over $0 $7,825 $31,850 $782.50 plus 15% of the amount over 7,825 $31,850 $64,250 $4,386.25 plus 25% of the amount over 31,850 $64,250 $97,925 $12,486.25 plus 28% of the amount over 64,250 $97,925 $174,850 $21,915.25 plus 33% of the amount over 97,925 $174,850 no limit $47,300.50 plus 35% of the amount over 174,850 if carols 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

Explanation:

Step1: Identify the tax - bracket

Carol's taxable income of $89,786 is in the bracket where taxable income is over $64,250 but not over $97,925.

Step2: Calculate the tax

The base - tax for this bracket is $12,486.25. The amount over $64,250 is $89,786−64,250 = 25,536$. The additional tax is 28% of this amount. So the additional tax is $0.28\times25,536=7,150.08$.

Step3: Find the total tax

The total tax is the base - tax plus the additional tax, so $12,486.25 + 7,150.08=19,636.33\approx19,636$.

Answer:

c. $19,636