If taxable income is The tax is Not over $36,900 15% of taxable income Over $36,900 and less than $89,150 $5,535 plus 28% of the excess over $36,900 Over $89,150 and less than $140,000 $20,165 plus 31% of the excess over $89,150 a

Answer a. Ms. Higgins Adjusted gross income $ 45000

Less: Itemized deductions and exemptiones (note 1) ( $ 6700)

Taxable Income    $ 38300  

Since Ms. Higgins taxable income is more than $ 36900 and less than $ 89150, marginal tax rate of 28% is applicable.

b. Mary Jo Belcher taxable income is $ 9525 which is less than $ 36900, therefore tax payment is 1428.75/- (9525 Multiply 15%)

c. Mrs. Shaughnessy taxable income is $ 65450

Tax calculation= upto $ 36900 Multiply 15% + $ 28550 ( $ 65450 less $ 36900) Multiply 28%

$ 5535 + $ 7994

Total Tax liability of Mrs. Shaughnessy is $ 13529

Average effective rate (note 2)= Tax liability divide by Taxable income

$ 13529 divided by $ 65450

20.67%

Notes: 1.  An itemized deduction is an expenditure on eligible products, services, or contributions that can be subtracted from adjusted gross income (AGI) to reduce your tax bill.

2. Our effective rate would be your total tax results divided by the taxable income.