Chapter 3 Activity – Taxes Individual Income Tax Brackets (2021) Marginal Tax Rate Single, taxable income over: Joint, taxable income over: Head of Household, taxable income over: 10% $0 $0 $0 12% $9,950 $19,900 $14,200 22% $40,525 $81,050 $54,200 24% $86,375 $172,750 $86,350 32% $164,925 $329,850 $164,900 35% $209,425 $418,850 $209,400 37% $523,600 $628,300 $523,600 Standard Deduction Amounts (2021) Filing Status Deduction Amount Single $12,550 Married Filing Jointly $25,100 Head of Household $18,800 Long-term Capital Gains & Qualified Dividends (2021) Tax Rate Single Joint Head of Household 0% Under $40,000 Under $80,800 Under $54,100 15% $40,400 $80,800 $54,100 20% $445,850 $501,600 $473,750 Additional 3.8% Net Investment Income Tax for MAGI over $200,000 / $250,000 / $200,000 Calculate the federal income tax liability, marginal tax rate, and average tax rate for each of the following scenarios. Assume the following for all scenarios: all income is traditionally earned, the maximum allowable standard deduction is taken, and no other deductions/credits are applied. Single Joint Gross Income Taxable Income Income Tax Marginal Rate Average Rate Taxable Income Income Tax Marginal Rate Average Rate $40,000 $75,000 $150,000 $500,000 $1,000,000 $10,000,000

FINANCIAL ACCOUNTING

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ISBN:9781259964947

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Chapter1: Financial Statements And Business Decisions

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Chapter 3 Activity – Taxes

Individual Income Tax Brackets (2021)

Marginal Tax Rate	Single, taxable income over:	Joint, taxable income over:	Head of Household, taxable income over:
10%	$0	$0	$0
12%	$9,950	$19,900	$14,200
22%	$40,525	$81,050	$54,200
24%	$86,375	$172,750	$86,350
32%	$164,925	$329,850	$164,900
35%	$209,425	$418,850	$209,400
37%	$523,600	$628,300	$523,600

Standard Deduction Amounts (2021)

Filing Status	Deduction Amount
Single	$12,550
Married Filing Jointly	$25,100
Head of Household	$18,800

Long-term Capital Gains & Qualified Dividends (2021)

Tax Rate	Single	Joint	Head of Household
0%	Under $40,000	Under $80,800	Under $54,100
15%	$40,400	$80,800	$54,100
20%	$445,850	$501,600	$473,750

Additional 3.8% Net Investment Income Tax for MAGI over $200,000 / $250,000 / $200,000

Calculate the federal income tax liability, marginal tax rate, and average tax rate for each of the following scenarios. Assume the following for all scenarios: all income is traditionally earned, the maximum allowable standard deduction is taken, and no other deductions/credits are applied.

	Single	Joint
Gross Income	Taxable Income	Income Tax	Marginal Rate	Average Rate	Taxable Income	Income Tax	Marginal Rate	Average Rate
$40,000
$75,000
$150,000
$500,000
$1,000,000
$10,000,000

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