Carol, a single TP, earns $75,000 in taxable income and $10,000 in interest from an investment in the City of Chicago bonds (non-taxable). Using the U.S. tax rate schedule:

1. How much federal income tax will she owe?
2. What is her average tax rate?
3. What is her effective tax rate?
4. If Carol earns an additional $40,000 of taxable income, what is her marginal tax rate?
5. What if she had $40,000 of additional deductions instead?

Answer rating: 100% (QA)

To calculate the federal income tax owed by Carol we need to determine her taxable income first Taxable income is calculated by subtracting any nontax... View the full answer