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Timmy Tappan is single and had $207,000 in taxable income. Using the rates from Table 2.3 in the chapter, calculate his income taxes. a. What is the average tax rate? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. What is the marginal tax rate? (Do not round intermediate calculations and enter your answer as a percent rounded to the nearest whole number, e.g., 32.) a. Average tax rate b. Marginal tax rate 22.40 % 32 %

Timmy Tappan is single and had $207,000 in taxable income. Using the rates from Table 2.3 in the chapter, calculate his income taxes. a. What is the average tax rate? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. What is the marginal tax rate? (Do not round intermediate calculations and enter your answer as a percent rounded to the nearest whole number, e.g., 32.) a. Average tax rate b. Marginal tax rate 22.40 % 32 %

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Timmy Tappan is single and had $207,000 in taxable income. Using the rates from Table 2.3 in the chapter, calculate his income taxes. a. What is the average tax rate? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. What is the marginal tax rate? (Do not round intermediate calculations and enter your answer as a percent rounded to the nearest whole number, e.g., 32.) a. Average tax rate b. Marginal tax rate 22.40 % 32 %
Transcribed Image Text:Timmy Tappan is single and had $207,000 in taxable income. Using the rates from Table 2.3 in the chapter, calculate his income taxes. a. What is the average tax rate? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. What is the marginal tax rate? (Do not round intermediate calculations and enter your answer as a percent rounded to the nearest whole number, e.g., 32.) a. Average tax rate b. Marginal tax rate 22.40 % 32 %
E X P Pearson Sign In X P Sign in TABLE 2.3 Personal Tax Rates for 2020 (Unmarried Individuals) @ 2 prod.reader-ui.prod.mheducation.com/epub/sn_3bb4d/data-uuid-13810c1e463f411c824b01e513993771#data-uuid-3e9aa40508cd41819f743c300f... ☆ O < 30 of 617 > important points about taxes for such entities, we take a look at personal tax rates in ravie 2.3. AS SHOWII, III ZUZU, there are seven tax brackets, ranging from 10 percent to a high of 37 percent, down from 39.6 percent in 2017. #3 с X P Pearson Sign In $ Taxable Income $ 0- 4 9,875 9,875 40,125 40,125- 85,525 85,525- 163,300 163,300-207,350 207,350-518,400 518,400+ AVERAGE VERSUS MARGINAL TAX RATES In making financial decisions, it is frequently important to distinguish between average and marginal tax rates. Your average tax rate is your tax bill divided by your taxable income-in other words, the percentage of your income that goes to pay taxes. Your marginal tax rate is the rate of the extra tax you would pay if you earned one more dollar. The percentage tax rates shown in Table 2.3 are all marginal rates. Put another way, the tax rates in Table 2.3 apply to the part of income in the indicated range only, not all income. The difference between average and marginal tax rates can best be illustrated with an example. Suppose you are single and had a taxable income of $100,000 in 2020. What was your tax bill? Using Table 2.3, we can figure your tax bill: % X M Question 2 - Chapte X 5 .10 ($9,875) = $ 987.50 .12 ($40, 125-9,875) = 3,630.00 .22 ($85,525-40, 125) 9,988.00 ^ G Search or type URL 6 MacBook Pro = & 7 2.3 Taxes * 8 Tax Rate 10% 12 22 24 32 35 37 ( + ( 1.11 9 X Timmy Tappan is s ) 0 Page 034 Aa Î ← € + = X +
Transcribed Image Text:E X P Pearson Sign In X P Sign in TABLE 2.3 Personal Tax Rates for 2020 (Unmarried Individuals) @ 2 prod.reader-ui.prod.mheducation.com/epub/sn_3bb4d/data-uuid-13810c1e463f411c824b01e513993771#data-uuid-3e9aa40508cd41819f743c300f... ☆ O < 30 of 617 > important points about taxes for such entities, we take a look at personal tax rates in ravie 2.3. AS SHOWII, III ZUZU, there are seven tax brackets, ranging from 10 percent to a high of 37 percent, down from 39.6 percent in 2017. #3 с X P Pearson Sign In $ Taxable Income $ 0- 4 9,875 9,875 40,125 40,125- 85,525 85,525- 163,300 163,300-207,350 207,350-518,400 518,400+ AVERAGE VERSUS MARGINAL TAX RATES In making financial decisions, it is frequently important to distinguish between average and marginal tax rates. Your average tax rate is your tax bill divided by your taxable income-in other words, the percentage of your income that goes to pay taxes. Your marginal tax rate is the rate of the extra tax you would pay if you earned one more dollar. The percentage tax rates shown in Table 2.3 are all marginal rates. Put another way, the tax rates in Table 2.3 apply to the part of income in the indicated range only, not all income. The difference between average and marginal tax rates can best be illustrated with an example. Suppose you are single and had a taxable income of $100,000 in 2020. What was your tax bill? Using Table 2.3, we can figure your tax bill: % X M Question 2 - Chapte X 5 .10 ($9,875) = $ 987.50 .12 ($40, 125-9,875) = 3,630.00 .22 ($85,525-40, 125) 9,988.00 ^ G Search or type URL 6 MacBook Pro = & 7 2.3 Taxes * 8 Tax Rate 10% 12 22 24 32 35 37 ( + ( 1.11 9 X Timmy Tappan is s ) 0 Page 034 Aa Î ← € + = X +
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