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Marc, a single taxpayer, earns $122,000 in taxable income and $3,800 in interest from an investment in city of Birmingham Bonds. Using the U.S. tax rate schedule for year 2018, what is his effective tax rate? (Use Tax rate schedules)
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Multiple Choice

24.99%


18.74%


19.91%


26.68%


None of the choices are correct.

Respuesta :

Answer:

None of the choices are correct

Explanation:

Given:

Income from city bond = $122,000

Find:

Effective tax rate

Computation:

We know thar Marc is single tax payee

So,

As per rule

Federal tax = $14,089.50 + (Income - $82,500)24%

Federal tax = $14,089.50 + ($122,000 - $82,500)24%

Federal tax = $23,569.50

Effective tax rate = (Federal tax / Income)100

Effective tax rate = [23,569.50/122,000]100

Effective tax rate = [0.1931]100

Effective tax rate = 19.31% (Approx.)

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