In USA there are seven federal tax brackets for the 2020 tax year: 10%, 12%, 22%, 24%, 32%, 35% and 37%. Your bracket depends on your taxable income and filing status. These are the rates for taxes due in April 2021 if you are a single filer. Taxable Income Tax Rate $0 to $9,875 10% $9,876 to $40,125 12% $40,126 to $85,525 22% $85,526 to $163,300 24% $163,301 to $207,350 32% $207,351 to $518,400 35% $518,401 or more
Question No. 2:
Part – A: Marks [3]
In USA there are seven federal tax brackets for the 2020 tax year: 10%, 12%, 22%, 24%, 32%, 35% and 37%. Your bracket depends on your taxable income and filing status. These are the rates for taxes due in April 2021 if you are a single filer.
|
Taxable Income |
Tax Rate |
|
$0 to $9,875 |
10% |
|
$9,876 to $40,125 |
12% |
|
$40,126 to $85,525 |
22% |
|
$85,526 to $163,300 |
24% |
|
$163,301 to $207,350 |
32% |
|
$207,351 to $518,400 |
35% |
|
$518,401 or more |
37% |
Table 2
- Create a Mathematical Model that represents the aforementioned information to calculate the annual income tax of each slab.
- How much annual income tax you will have to pay if your monthly taxable income is $13,750.
Part – B: Marks [2]
A major city wants to establish a sinking fund to pay off debts of PKR 800 million which come due in 10 years. The city can earn interest at the rate of 8 percent per year compounded monthly. If first deposit is made 1 month from now;
- What monthly deposit will be required to accumulate the PKR 800 million?
- How much interest will be earned on these deposits
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