Suppose Elaine has a taxable income of $175,000 and is subject to the following tax schedule as
Question:
Suppose Elaine has a taxable income of $175,000 and is subject to the following tax schedule as she is married filing jointly.
1) What is Elaine's marginal income tax rate (Hint: tax rate on next dollar earned)?
2) What is Elaine's effective income tax rate (An individual's effective tax rate represents the average of all tax brackets that their income passes through)?
3) What is Elaine's after-tax earnings?
4) Suppose Elaine incurred $5,000 in interest income from municipal bonds, received $8,000 in child support, paid $5,500 in charitable contributions, $7,500 in home mortgage interest, $8,500 in state income taxes, and $2,000 in property taxes. Should Elaine use itemized deductions or the standard deduction of $25,900?
5) Suppose Elaine incurred $5,000 in interest income from municipal bonds, received $8,000 in child support, paid $5,500 in charitable contributions, $7,500 in home mortgage interest, $8,500 in state income taxes, and $2,000 in property taxes. How much in itemized deductions may Elaine take?