Clancy is getting ready to do his taxes. He is single and lives in New York City. Clancy earned $70,000 in taxable income in 2015. He reviews the following table, which shows the IRS tax rates for a single taxpayer in 2015.

On Annual Taxable Income...	The Tax Rate Is...
	(Percent)
Up to $9,225	10.0
From $9,225 to $37,450	15.0
From $37,450 to $90,750	25.0
From $90,750 to $189,300	28.0
From $189,300 to $411,500	33.0
From $411,500 to $413,200	35.0
Over $413,200	39.6

Based on the IRS table, Clancy calculates that his marginal tax rate is 10,15,25,28,33,35 %? when his annual taxable income is $70,000.

Clancy calculates that he owes 5156.25, 9060, 12371, 13293.75, 17500 $ ? in income taxes for 2015.

Clancy then calculates that his average tax rate is 16, 19, 21, 24, 25 %? , based on the annual income level and the amount of taxes he owes for 2015.

After figuring out what he owes in taxes in 2015, Clancy decides to ask an accountant for tax advice. The accountant claims that he has found a legal way to shelter $1,000 of taxable income from the federal government.

The maximum amount that Clancy is willing to pay to learn this strategy and reduce his taxable income by $1,000 is 0, 190, 250, 1000 $ ? . (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.) the Qs that I need answers to are Bolded. we have to choose the right answer from these 4 options.

Answer rating: 100% (QA)

Refer to given table At a taxable income of 70000 marginal tax rate is 2... View the full answer