Calculating Income Taxes Due Before beginning this assignment, it is important to know the definition and difference between the following words: Gross income, taxable income and net income. Make sure you know the difference and as you read the questions, be sure to use the correct definition based on the word used in the question Income tax calculations in North Carolina have been simplified so that all residents now paya flat rate, no matter what their income level. In 2017 the individual income tax rate is 5.499%. 1. If a NC resident had deductions and exemptions applied so that their taxable income was $27,500, calculate the amount of NC tax due based on the flat 5.499 % tax rate. Round to two decimal places. 2. However, in 2013, the tax rates varied based on your taxable income. The following table shows that for incomes up to $12.750 the tax rate was 6%. If someone had a taxable income of $35,000, they would pay 6% of the first $12,750 (which equals $765). Then they would pay 7% on the amount over $12,750 up to $35,000. They would pay 7% on $22,250. (This number comes from $35000 - $12,750). If the person had an income above $60,000 the portion OVER $60,000 would be charged 7.75%. The total of the amount of taxes due would be calculated as listed in column 3 of the following chart. But not over: Your tax is: And taxable income is more than: SO $12.750 $12.750 $60,000 6% of the NC taxable income amount $765 + 7% of the amount over $12,750 $4,072.50 +7.75% of the amount over $60,000 $60,000 Using the above chart, calculate the amount of tax a person filing taxes in 2013 would have paid if they had a taxable income of $50,000. Round to two decimal places Then, assuming a flat tax of 6.5%, how much would the same person have paid in taxes? Round to two decimal places Which method causes the person to pay the most taxes? How much more would they pay? As of 2018, the federal government has yet to institute a flat tax. The charts below indicate the 2018 tax rate: for single and married filing jointly for each category of income. (2) SINGLE praon (including head at homehold the mount ang The income thoking alone to withhold & Not over 3,00 50 Over Dutover 53,700 $13,275.900 plus 10% $13,205 -542,400 was 12% $42.400 54.450.5022 56,200 -10.200512099 50 plus 20% $161,200 -8200, 70053208950 plus $200 700 8500,700.345.620.50 plus $509,700 $15060 50 37 MARRIED pron- the wount of erung The new heiding alokoncesis: to who is Not over $11.990 ofences werOver Dutover of excess over -$2.700 511550 -$30 600 50.00 pa 10% --$11.560 -S132 $30.000 $88950 - $1,905.0 plus 12% -330600 -50,000 $0.950-51755058,907.00 ps 226 - - 200 5176550 -5326550 528.179.00 p3 -5175590 -$1612005326550 5411550 564 179.00 plus 32% -306550 -4203,700 5411550-5611550 S71.379.00 plus 35% -3411550 ---$503700911550 3161 379 00 37% 5611 550 Also, the federal standard deduction per person is $6350 and the personal exemption is $4050 Use the tax table information above to compute the required values, making sure to show your calculations steps. Be sure to consider the deductions stated above. 3. Carlos is thinking about getting a new job and is reviewing his financial situation. a. Carlos had a gross income of $28,683. If he decides to file "single how much tax would he pay? b. Carlos and Gabriela are considering getting married and Carlos wondered what their tax bill would be together. He texted her to look up her tax information and find her taxes due. She said she made a gross income of $39,570. Determine the amount of tax Carlos and Gabriela would have filed jointly as a married couple. c. Carlos decided to compare their tax assessment for each filing single and compare it to filing jointly. So he calculated Gabriela's individual tax {filing single). Determine the amount of tax due if she files as an individual d. Compare the values he found when filing single for himself and Gabriela with the taxes due when filing jointly Are the two amounts equal? If not, which method makes them pay the most taxes? How much more? 4. John is single, with a middle-class job. His taxable income for 2018 was for $86,000. What was his tax assessment amount of taxes due)? b. If his taxable income increased 10%, what would be his new tax assessment 5. Jose and Ann are married and filed jointly. Their taxable income for 2018 was $75,000, what was their tax assessment? 6. Shauna is single. Her taxable income for 2018 was $82,000, what was her tax assessment? 7. Karen and Bill are married. Together their taxable income was $89,400. What was their tax assessment? 8. Assume you have a balance of $1300 on a credit card with an APR of 18%, or 1.5% per month. You start making monthly payments of $275, but at the same time you charge an additional $75 per month to the credit card. Assume that interest for a given month is based on the balance for the previous month (no interest is charged on new expenses only on the previous month's balance). The following table shows how you can calculate your monthly balance. Complete and extend the table to show your balance at the end of each month until the debt is paid off. Round all answers to 2 decimal places. Month Expenses Interest New Balance $1500 0 1 275 75 2 275 75 3 275 75 4 225 75 S 275 75 continue until paid off How long does it take to pay off the credit card debut? The following table shows the expenses and payments for 8 months on a credit card account with an initial balance of $500. Assume that the interest rate is 1.5% per month (18% APRI and that interest for a given month is charged only on the balance for the previous month. Complete the table. Round all answers to 2 decimal places. Month Payment Expenses Interest New Balance 0 500 1 250 180 2 275 275 3 500 400 4 600 S50 Calculating Income Taxes Due Before beginning this assignment, it is important to know the definition and difference between the following words: Gross income, taxable income and net income. Make sure you know the difference and as you read the questions, be sure to use the correct definition based on the word used in the question Income tax calculations in North Carolina have been simplified so that all residents now paya flat rate, no matter what their income level. In 2017 the individual income tax rate is 5.499%. 1. If a NC resident had deductions and exemptions applied so that their taxable income was $27,500, calculate the amount of NC tax due based on the flat 5.499 % tax rate. Round to two decimal places. 2. However, in 2013, the tax rates varied based on your taxable income. The following table shows that for incomes up to $12.750 the tax rate was 6%. If someone had a taxable income of $35,000, they would pay 6% of the first $12,750 (which equals $765). Then they would pay 7% on the amount over $12,750 up to $35,000. They would pay 7% on $22,250. (This number comes from $35000 - $12,750). If the person had an income above $60,000 the portion OVER $60,000 would be charged 7.75%. The total of the amount of taxes due would be calculated as listed in column 3 of the following chart. But not over: Your tax is: And taxable income is more than: SO $12.750 $12.750 $60,000 6% of the NC taxable income amount $765 + 7% of the amount over $12,750 $4,072.50 +7.75% of the amount over $60,000 $60,000 Using the above chart, calculate the amount of tax a person filing taxes in 2013 would have paid if they had a taxable income of $50,000. Round to two decimal places Then, assuming a flat tax of 6.5%, how much would the same person have paid in taxes? Round to two decimal places Which method causes the person to pay the most taxes? How much more would they pay? As of 2018, the federal government has yet to institute a flat tax. The charts below indicate the 2018 tax rate: for single and married filing jointly for each category of income. (2) SINGLE praon (including head at homehold the mount ang The income thoking alone to withhold & Not over 3,00 50 Over Dutover 53,700 $13,275.900 plus 10% $13,205 -542,400 was 12% $42.400 54.450.5022 56,200 -10.200512099 50 plus 20% $161,200 -8200, 70053208950 plus $200 700 8500,700.345.620.50 plus $509,700 $15060 50 37 MARRIED pron- the wount of erung The new heiding alokoncesis: to who is Not over $11.990 ofences werOver Dutover of excess over -$2.700 511550 -$30 600 50.00 pa 10% --$11.560 -S132 $30.000 $88950 - $1,905.0 plus 12% -330600 -50,000 $0.950-51755058,907.00 ps 226 - - 200 5176550 -5326550 528.179.00 p3 -5175590 -$1612005326550 5411550 564 179.00 plus 32% -306550 -4203,700 5411550-5611550 S71.379.00 plus 35% -3411550 ---$503700911550 3161 379 00 37% 5611 550 Also, the federal standard deduction per person is $6350 and the personal exemption is $4050 Use the tax table information above to compute the required values, making sure to show your calculations steps. Be sure to consider the deductions stated above. 3. Carlos is thinking about getting a new job and is reviewing his financial situation. a. Carlos had a gross income of $28,683. If he decides to file "single how much tax would he pay? b. Carlos and Gabriela are considering getting married and Carlos wondered what their tax bill would be together. He texted her to look up her tax information and find her taxes due. She said she made a gross income of $39,570. Determine the amount of tax Carlos and Gabriela would have filed jointly as a married couple. c. Carlos decided to compare their tax assessment for each filing single and compare it to filing jointly. So he calculated Gabriela's individual tax {filing single). Determine the amount of tax due if she files as an individual d. Compare the values he found when filing single for himself and Gabriela with the taxes due when filing jointly Are the two amounts equal? If not, which method makes them pay the most taxes? How much more? 4. John is single, with a middle-class job. His taxable income for 2018 was for $86,000. What was his tax assessment amount of taxes due)? b. If his taxable income increased 10%, what would be his new tax assessment 5. Jose and Ann are married and filed jointly. Their taxable income for 2018 was $75,000, what was their tax assessment? 6. Shauna is single. Her taxable income for 2018 was $82,000, what was her tax assessment? 7. Karen and Bill are married. Together their taxable income was $89,400. What was their tax assessment? 8. Assume you have a balance of $1300 on a credit card with an APR of 18%, or 1.5% per month. You start making monthly payments of $275, but at the same time you charge an additional $75 per month to the credit card. Assume that interest for a given month is based on the balance for the previous month (no interest is charged on new expenses only on the previous month's balance). The following table shows how you can calculate your monthly balance. Complete and extend the table to show your balance at the end of each month until the debt is paid off. Round all answers to 2 decimal places. Month Expenses Interest New Balance $1500 0 1 275 75 2 275 75 3 275 75 4 225 75 S 275 75 continue until paid off How long does it take to pay off the credit card debut? The following table shows the expenses and payments for 8 months on a credit card account with an initial balance of $500. Assume that the interest rate is 1.5% per month (18% APRI and that interest for a given month is charged only on the balance for the previous month. Complete the table. Round all answers to 2 decimal places. Month Payment Expenses Interest New Balance 0 500 1 250 180 2 275 275 3 500 400 4 600 S50