Question

federal income tax % you owe is calculated based on total gross income for the year. true or false. select the best choice based on the reason provided to support your answer. false. federal tax % you owe is based on taxable income, not total gross income. true. federal tax % you owe is based on your total gross income (includes wages/salary, interest/dividends, capital gains, business income, retirement distributions). false. federal tax % you owe is based on agi (adjusted gross income), not total gross income. true. federal tax % you owe is based on total gross income (which only includes wages and salary)

Explanation:

Federal income tax percentage is based on taxable income, which is calculated after certain deductions and adjustments from total gross income. Total gross income includes all income sources like wages, dividends etc., but tax is not directly calculated on it. Adjusted Gross Income (AGI) is also an intermediate - step in calculating taxable income.

Answer:

False. Federal tax % you owe is based on Taxable Income, not Total Gross Income.