Mr. Hoosier has gathered all these data about his finances.Salary $Mr. Hoosier has gathered all...

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Accounting

Mr. Hoosier has gathered all these data about his finances.
Salary                               $159,000
Taxableinterest                $5600
Municipal Bondinterest          $20,000
Total Itemizeddeductions        $9500
The personal exemption is $4700. The standardized deduction fora single filer is 5000.
If Taxable Incomeis                              Then tax is:
0-8000                                            10% of the amount over 0
8000-35,000                                         800 + 15% of the amount over 8000
35000-55,000                                       4850 + 20% of the amount over 35000
55000-150,000                              8850 + 30% of the amount over 55000
150000 –200000                                 37350 + 35% of the amount over 150000
200000 andover                            54850 + 40% of the amount over 200000

1. What is his tax?
2. His average effective tax rate
3. His average tax rate
4. His marginal tax rate
5. Assume he discovers that he is eligible for a 500 taxdeduction. How much does his tax liability fall with thataddition?
6. Now he discovers that he is eligible for a $500 tax credit.How much does his tax liability fall due to this credit?

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3.7 Ratings (555 Votes)

SOLUTION CALCULATION OF TAXABLE INCOME OF Mr HOOSIER 1Salary 159000 2Taxable Interest 5600 Gross Total Income 164600 less Total Itemized deductions 9500 personal See Answer

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In: AccountingMr. Hoosier has gathered all these data about his finances.Salary $Mr. Hoosier has gathered all these data about his finances.Salary $159,000Taxableinterest $5600Municipal Bondinterest $20,000Total Itemizeddeductions $9500The personal exemption is $4700. The standardized deduction fora single filer is 5000.If Taxable Incomeis Then tax is:0-8000 10% of the amount over 08000-35,000 800 + 15% of the amount over 800035000-55,000 4850 + 20% of the amount over 3500055000-150,000 8850 + 30% of the amount over 55000150000 –200000 37350 + 35% of the amount over 150000200000 andover 54850 + 40% of the amount over 200000 1. What is his tax?2. His average effective tax rate3. His average tax rate4. His marginal tax rate5. Assume he discovers that he is eligible for a 500 taxdeduction. How much does his tax liability fall with thataddition?6. Now he discovers that he is eligible for a $500 tax credit.How much does his tax liability fall due to this credit?