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What would Sandra's tax liability on an income of $86,937 be if the 2010 Tax Rate...

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linnie4352 | Student, Undergraduate | Salutatorian

Posted April 9, 2011 at 12:26 PM via web

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What would Sandra's tax liability on an income of $86,937 be if the 2010 Tax Rate Schedule given below was used?

If taxable income is over:       But not over:     Tax Rate                      $0                                                $8,375            10%
$8,375                                       $34,000            15%
$34,000                                     $82,400            25%
$82,400                                   $171,850            28%

Tagged with economics, income tax

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justaguide | College Teacher | (Level 2) Distinguished Educator

Posted April 9, 2011 at 12:58 PM (Answer #1)

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You had provided Sandra's income as $86,937. From the income tax brackets that you have provided now and the marginal rates of taxation for each of them we can divide her income of $86,937 into each of the slabs as follows:

$86,937 = 8375 + (34000 - 8375) + (82400 - 34000) + 4537

=> 8375 + 25625 + 48400 + 4537

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

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

The tax for $48400 = 25% of 48400 = $12100

The tax for $4537 = 28% of 4537 = $1270.36

This gives the total tax as: 837.5 + 3843.75 + 12100 +1270.36

=> $18051.61

The total tax liability of Sandra is $18052. The option D of the previous question was the right option.

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