Understand Federal taxes (ANSWERS)

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829

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Economics

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Jan 9, 2024

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Advanced Financial Algebra Unit 3 Georgia’s K -12 Mathematics Standards THIS WORK IS LICENSED UNDER A CREATIVE COMMONS ATTRIBUTION – NONCOMMERCIAL – SHAREALIKE 4.0 INTERNATIONAL LICENSE © 2023 Georgia Department of Education All Rights Reserved Page 11 of 16 Apply Understanding the 2022 Federal Income Tax Brackets Before we complete a 1040 form to simulate filing federal income taxes, let’s take a look at how the tax rate is represented by a piecewise function. Use the table to answer the following questions. Tax Rate For Single Filers 10% $0 to $10,275 12% $10,275 to $41,775 22% $41,775 to $89,075 24% $89,075 to $170,050 32% $170,050 to $215,950 35% $215,950 to $539,900 37% $539,900 or more Source: Internal Revenue Service 1. Create a piecewise function based on the table above. 2. Graph the piecewise function. 3. Interpret the following characteristics: intercepts, intervals of increase and decrease, rates of change, positive/negative intervals, end behaviors, symmetry, relative extrema, and jump discontinuities. 4. Felix has a gross income of $18,000. What is his total tax due? 5. Sarina made $42,000 in the calendar year. How much does she owe in federal taxes? 6. Kennedy has a gross income of $95,000. What is her total tax due? When talking about taxes, it’s important to keep i n mind the difference between marginal tax rate and effective tax rate. Marginal tax rate : The highest tax bracket that your taxable income falls in. Effective tax rate : The actual percentage of your taxable income that you end up paying in taxes.

Advanced Financial Algebra Unit 3 Georgia’s K -12 Mathematics Standards THIS WORK IS LICENSED UNDER A CREATIVE COMMONS ATTRIBUTION – NONCOMMERCIAL – SHAREALIKE 4.0 INTERNATIONAL LICENSE © 2023 Georgia Department of Education All Rights Reserved Page 12 of 16 7. Aiden has a gross income of $63,000 and takes the standard deduction. His total taxes due are $6,628. a. What is his taxable income? b. What is his marginal tax rate? c. What is his effective tax rate? Round to the nearest hundredth of a percent. 8. Liam has a gross income of $120,000 and takes the standard deduction. a. What is his taxable income? b. What is his marginal tax rate? c. What is his effective tax rate? Round to the nearest hundredth of a percent. 9. Explain the difference between the common misconception that people might have about how tax brackets work and how they actually work. 10. Reflect on your process for calculating the total tax due. What is one mathematical strategy you can use to make the repeated calculations more efficient? Why would that be faster? 11. Why is the marginal tax rate always higher than the effective tax rate? 12. It’s helpful to know the background of how much you owe in federal taxes by calculating by hand. What is another way that people can look up how much they owe? Harold Hines: You may use Google to answer #11 and #12 Harold Hines: also #9

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