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reviews the following table, which shows the IRS tax rates for a single taxpayer in 2022. On Annual Taxable Income... Up to $10,275 From $10,275 to $41,775 From $41,775 to $89,075 From $89,075 to $170,050 From $170,050 to $215,950 From $215,950 to $539,900 Over $539,900 The Tax Rate Is... (Percent) 10.0 12.0 22.0 24.0 32.0 35.0 37.0 Based on the IRS table, Kenji calculates that his marginal tax rate is Kenji calculates that he owes in income taxes for 2022. Kenji then calculates that his average tax rate is when his annual taxable income is $205,000. , based on the annual income level and the amount of taxes he owes for 2022. After figuring out what he owes in taxes in 2022, Kenji decides to ask an accountant for tax advice. The accountant claims that he has found a legal way to shelter $4,000 of taxable income from the federal government. The maximum amount that Kenji is willing to pay to learn this strategy and reduce his taxable income by $4,000 is (Hint: Sheltering some income means finding a legal way to avoid being charged income tax on that income. For example, someone who has $50,000 in taxable income and shelters $10,000 pays income tax on only $40,000.)

reviews the following table, which shows the IRS tax rates for a single taxpayer in 2022. On Annual Taxable Income... Up to $10,275 From $10,275 to $41,775 From $41,775 to $89,075 From $89,075 to $170,050 From $170,050 to $215,950 From $215,950 to $539,900 Over $539,900 The Tax Rate Is... (Percent) 10.0 12.0 22.0 24.0 32.0 35.0 37.0 Based on the IRS table, Kenji calculates that his marginal tax rate is Kenji calculates that he owes in income taxes for 2022. Kenji then calculates that his average tax rate is when his annual taxable income is $205,000. , based on the annual income level and the amount of taxes he owes for 2022. After figuring out what he owes in taxes in 2022, Kenji decides to ask an accountant for tax advice. The accountant claims that he has found a legal way to shelter $4,000 of taxable income from the federal government. The maximum amount that Kenji is willing to pay to learn this strategy and reduce his taxable income by $4,000 is (Hint: Sheltering some income means finding a legal way to avoid being charged income tax on that income. For example, someone who has $50,000 in taxable income and shelters $10,000 pays income tax on only $40,000.)

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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```markdown ## Homework (Ch 12) ### 2. Taxes paid for a given income level Suppose that Kenji is preparing to file his taxes. He is single and currently lives in Philadelphia. Kenji earned $205,000 in taxable income in 2022. He reviews the following table, which shows the IRS tax rates for a single taxpayer in 2022. **Tax Rate Table** | On Annual Taxable Income... | The Tax Rate Is... (Percent) | |-----------------------------------|-----------------------------| | Up to $10,275 | 10.0 | | From $10,275 to $41,775 | 12.0 | | From $41,775 to $89,075 | 22.0 | | From $89,075 to $170,050 | 24.0 | | From $170,050 to $215,950 | 32.0 | | From $215,950 to $539,900 | 35.0 | | Over $539,900 | 37.0 | Based on the IRS table, Kenji calculates that his marginal tax rate is __% when his annual taxable income is $205,000. Kenji calculates that he owes _________ in income taxes for 2022. Kenji then calculates that his average tax rate is __%, based on the annual income level and the amount of taxes he owes for 2022. After figuring out what he owes in taxes in 2022, Kenji decides to ask an accountant for tax advice. The accountant claims that he has found a legal way to shelter $4,000 of taxable income from the federal government. The maximum amount that Kenji is willing to pay to learn this strategy and reduce his taxable income by $4,000 is _________. (Hint: Sheltering) ``` ### Diagram Explanation The provided table lists the tax rates for various brackets of annual taxable income. Each range of income is associated with a specific tax percentage rate, reflecting how the U.S. tax system operates on a marginal basis, where different portions of income are taxed at different rates.
Transcribed Image Text:```markdown ## Homework (Ch 12) ### 2. Taxes paid for a given income level Suppose that Kenji is preparing to file his taxes. He is single and currently lives in Philadelphia. Kenji earned $205,000 in taxable income in 2022. He reviews the following table, which shows the IRS tax rates for a single taxpayer in 2022. **Tax Rate Table** | On Annual Taxable Income... | The Tax Rate Is... (Percent) | |-----------------------------------|-----------------------------| | Up to $10,275 | 10.0 | | From $10,275 to $41,775 | 12.0 | | From $41,775 to $89,075 | 22.0 | | From $89,075 to $170,050 | 24.0 | | From $170,050 to $215,950 | 32.0 | | From $215,950 to $539,900 | 35.0 | | Over $539,900 | 37.0 | Based on the IRS table, Kenji calculates that his marginal tax rate is __% when his annual taxable income is $205,000. Kenji calculates that he owes _________ in income taxes for 2022. Kenji then calculates that his average tax rate is __%, based on the annual income level and the amount of taxes he owes for 2022. After figuring out what he owes in taxes in 2022, Kenji decides to ask an accountant for tax advice. The accountant claims that he has found a legal way to shelter $4,000 of taxable income from the federal government. The maximum amount that Kenji is willing to pay to learn this strategy and reduce his taxable income by $4,000 is _________. (Hint: Sheltering) ``` ### Diagram Explanation The provided table lists the tax rates for various brackets of annual taxable income. Each range of income is associated with a specific tax percentage rate, reflecting how the U.S. tax system operates on a marginal basis, where different portions of income are taxed at different rates.
The image is of a webpage from an educational platform, discussing IRS tax rates for a single taxpayer in 2022. It features a table and some text regarding a case study: ### IRS Tax Rates Table (2022) The table indicates the tax rates applied to different ranges of annual taxable income: - **Up to $10,275**: 10.0% - **From $10,275 to $41,775**: 12.0% - **From $41,775 to $89,075**: 22.0% - **From $89,075 to $170,050**: 24.0% - **From $170,050 to $215,950**: 32.0% - **From $215,950 to $539,900**: 35.0% - **Over $539,900**: 37.0% ### Case Study Following the table, there is a scenario involving a taxpayer named Kenji: - Kenji calculates that his **marginal tax rate** is determined based on his annual taxable income of **$205,000**. - Kenji needs to compute how much he owes in income taxes for 2022 and his average tax rate, based on his annual income and the taxes owed. - An accountant advises Kenji on a strategy to legally shelter $4,000 of his taxable income, thereby reducing his tax burden. - The **maximum amount Kenji is willing to pay** for this strategy is discussed, with a hint provided about the advantages of income sheltering. This case study and the accompanying table illustrate how tax brackets function and offer practical guidance on tax planning strategies.
Transcribed Image Text:The image is of a webpage from an educational platform, discussing IRS tax rates for a single taxpayer in 2022. It features a table and some text regarding a case study: ### IRS Tax Rates Table (2022) The table indicates the tax rates applied to different ranges of annual taxable income: - **Up to $10,275**: 10.0% - **From $10,275 to $41,775**: 12.0% - **From $41,775 to $89,075**: 22.0% - **From $89,075 to $170,050**: 24.0% - **From $170,050 to $215,950**: 32.0% - **From $215,950 to $539,900**: 35.0% - **Over $539,900**: 37.0% ### Case Study Following the table, there is a scenario involving a taxpayer named Kenji: - Kenji calculates that his **marginal tax rate** is determined based on his annual taxable income of **$205,000**. - Kenji needs to compute how much he owes in income taxes for 2022 and his average tax rate, based on his annual income and the taxes owed. - An accountant advises Kenji on a strategy to legally shelter $4,000 of his taxable income, thereby reducing his tax burden. - The **maximum amount Kenji is willing to pay** for this strategy is discussed, with a hint provided about the advantages of income sheltering. This case study and the accompanying table illustrate how tax brackets function and offer practical guidance on tax planning strategies.
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