Mr. Vasquez, a single adult, earned $40,000 in taxable income last year. Use the rate table below to calculate how much he must pay in income taxes?
Underline Starts2013 U.S. Federal Income Tax Rates for Single AdultsUnderline Ends
10% on taxable income from $0 to $8,925, plus
15% on taxable income over $8,925 to $36,250, plus
25% on taxable income over $36,250 to $87,850, plus
28% on taxable income over $87,850 to $183,250, plus
33% on taxable income over $183,250 to $398,350, plus
35% on taxable income over $398,350 to $400,000, plus
39.6% on taxable income over $400,000.
Question 5 options:
$5928.75
$20,000
$17,890.50
$10,000
To calculate how much Mr. Vasquez must pay in income taxes, we need to determine which tax bracket his taxable income falls into and calculate the tax amount accordingly.
First, let's find the tax bracket for Mr. Vasquez's taxable income of $40,000:
- The first tax bracket is from $0 to $8,925, taxed at 10%.
- The second tax bracket is from $8,925 to $36,250, taxed at 15%.
Mr. Vasquez's taxable income falls entirely within the second tax bracket.
To calculate the tax amount, we need to find the portion of his income that falls into the second tax bracket:
Taxable income in the second tax bracket = $40,000 - $8,925 = $31,075
Now, we can calculate the tax on that portion using the tax rate for the second tax bracket:
Tax amount in the second tax bracket = $31,075 * 0.15 = $4,661.25
Therefore, Mr. Vasquez must pay $4,661.25 in income taxes.
None of the provided answer choices ($5928.75, $20,000, $17,890.50, $10,000) is correct.