**Tax Scenario for Alan and Sara Winthrop**Alan and Sara Winthrop are a married couple filing a joint income tax return. They have two children and legitimate itemized deductions totaling $26,750. Their total income from wages is $307,100. Assume the following tax table is applicable:**Married Couples Filing Joint Returns**| If Your Taxable Income Is | You Pay This Amount on the Base of the Bracket | Plus This Percentage on the Excess over the Base | Average Tax Rate at Top of Bracket ||---------------------------|-----------------------------------------------|-------------------------------------------------|------------------------------------|| Up to $19,750 | $0.00 | 10.0% | 10.0% || $19,750-$80,250 | $1,975.00 | 12.0% | 11.5 || $80,250-$171,050 | $9,235.00 | 22.0% | 17.1 || $171,050-$326,600 | $29,211.00 | 24.0% | 20.4 || $326,600-$414,700 | $66,543.00 | 32.0% | 22.8 || $414,700-$622,050 | $94,735.00 | 35.0% | 26.9 || Over $622,050 | $167,307.50 | 37.0% | 37.0 |**Question:**What is their marginal tax rate?- a. 32.0%- b. 35.0%- c. 12.0%- d. 22.0%- e. 24.0%**Answer:**To determine their marginal tax rate, we need to calculate their taxable income and identify which tax bracket it falls into. Subtract the itemized deductions ($26,750) from their total income ($307,100) to find the taxable income:Taxable Income = $307,100 - $26,750 = $280,350Based on the tax table, $280,350 falls in the $171,050-$326,600 bracket.Thus, their marginal tax rate is 24.0%.**Correct Option

Marginal tax is tax on the additional income earned above the base income and is tax rate of extra…

Answered: lan and Sara Winthrop are a married…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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