Homework Help

What would Eddie's tax liability be?Eddie, a single taxpayer, has W-2 income of...

user profile pic

linnie4352 | Student, Undergraduate | (Level 1) Salutatorian

Posted April 9, 2011 at 11:09 AM via web

dislike 0 like

What would Eddie's tax liability be?

Eddie, a single taxpayer, has W-2 income of $42,487. His tax liability is:
A. $4,131
B. $4,550
C. $5,534
D. $6,800

1 Answer | Add Yours

Top Answer

user profile pic

justaguide | College Teacher | (Level 2) Distinguished Educator

Posted April 9, 2011 at 1:35 PM (Answer #1)

dislike 1 like

Using the income brackets and the marginal rates for each of them mentioned here, Eddie's income of $42,487 can be divided as follows:

$42,487 = $ 8,375 + ($34000 - $8375) + ($42487 - $34000)

=> $8375 + $25625 + $8487

The tax for $8375 is 10% of 8375 = $837.5

The tax for $ 25625 is 15% of 25625 = 3843.75

The tax for $8487 is 25% of $8487 = 2121.75

This gives the total tax as $837.5 + $3843.75 + $2121.75 = $6803

I guess the decimals have been eliminated in the calculation done to arrive at the income tax in the options you have provided.

That would make the correct income tax $6800 or option D.

Join to answer this question

Join a community of thousands of dedicated teachers and students.

Join eNotes