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Using the tax table on page 81, determine the amount of taxes for the following situations:

a. A head of household with taxable income of $65,000.

b. A single person with taxable income of $40,000.

c. Married taxpayers filing jointly with taxable income of $80,000.

Step 3: Calculating Taxes Owed Your taxable income is the basis for computing the amount of tax owed did you know? The most frequently overlooked tax deductions are state sales taxes, reinvested dividends, out-of-pocket charitable contributions, student loan interest paid by parents, moving expenses to take a first job, military reservists' travel expenses, child care credit, estate tax on income in respect of a decedent, state tax you paid last spring, refinancing points, and jury pay paid to employer TAX RATES Use your taxable income in conjunction with the appropriate tax table or tax schedule. For 2014, the seven-rate system for federal income tax was as follows Rate orn Taxable Income 10% Single Taxpayers Up to $9,075 $9,076- $36,900 $36,901 $89,350 $89,351 $186,350 $186,351 $226,851-$405,100 $206,601- $405,100 $405,101- $406,750 Over $406,751 Married Taxpayers Fling Jointly Heads of Household Up to $12,950 $12,951 $49,400 $49,401 $127,550 Up to $18,150 $18,151-$73,800 25 $73,801-$148,850 28 $148,851-$226,850 S127,551 $206,600 $405,100 35 $405,101-$457,600 $405,101 $432,200 Over $432,201 39.6 Over $457,601 A separate tax rate schedule also exists for married persons who file separate income tax returns The 10, 15, 25, 28, 33, 35 and 39.6 percent rates are referred to as marginal tax rates. These rates are used to calculate tax on the last (and next) dollar of taxable income. After deductions and exemptions, a person in the 35 percent tax bracket pays 35 cents in taxes for the next dollar of taxable income in that bracket. In contrast, the average tax rate is based on the total tax due divided by taxable income. Except for taxpayers in the 10 percent bracket, this rate is less than a person's marginal tax rate. For example, a person with taxable income of $40,000 and a total tax bill of $4,200 would have an average tax rate of 10.5 percent ($4,200 4 $40,000)

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