Use the following information to calculate the federal average tax rate (ignore tax credits) for a...

   

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Use the following information to calculate the federal average tax rate (ignore tax credits) for a taxpayer who earned $115,000 from employment, and where bonds were sold for $20,000 during the year that originally cost $10,000: Taxable Income Up to $47,630 Tax Rate 15% On the next $47,629 20.5% On the next $52,408 26% On the next $62,704 29% Over $210,371 33% Based on the above, the average tax rate (ATR) is closest to: Select one: a. 19.15% b. 19.45% C. 20.5% d. 26.0% Use the following information to calculate the federal average tax rate (ignore tax credits) for a taxpayer who earned $115,000 from employment, and where bonds were sold for $20,000 during the year that originally cost $10,000: Taxable Income Up to $47,630 Tax Rate 15% On the next $47,629 20.5% On the next $52,408 26% On the next $62,704 29% Over $210,371 33% Based on the above, the average tax rate (ATR) is closest to: Select one: a. 19.15% b. 19.45% C. 20.5% d. 26.0%

Answer rating: 100% (QA)

To calculate the average tax rate ATR we need to find the total tax paid based on the taxpayers income from employment 115000 and the capital gains from the sale of bonds 10000 Income Tax Calculation Tax on the first 47630 47630 015 714450 Tax on the next 47629 115000 47630 47629 0205 978345 Total tax on income 714450 978345 1692795 Capital Gains Tax Calculation Capital gains from the sale of bonds 20000 10000 10000 Capital gains tax rate 50 of the regular tax rate Capital gains tax 10000 015 050 750 Total Tax Paid 1692795 Income Tax 750 Capital Gains Tax 1767795 Average Tax Rate ATR ATR Total Tax Paid Total Income Total Income 115000 Employment Income 10000 Capital Gains 125000 ATR 1767795 125000 01414 or 1414 Therefore the average tax rate ATR for the taxpayer ... View the full answer