91Ó°ÊÓ

Based on the latest federal tax brackets, for a couple filing jointly with a taxable income of \$400,000:- The first \$20,000 is taxed at 10% which is \$2,000.- The amount over \$20,000 and up to \$80,000 is taxed at 12%. So \$60,000 is taxed at 12% which makes \$7,200.- The amount over \$80,000 and up to $172,750 is taxed at 22%. So \$92,750 is taxed at 22% which equals \$20,405.- The amount over \$172,750 and up to \$329,850 is taxed at 24%. So \$157,100 is taxed at 24% which equals \$37,704.- The amount over \$329,850 and up to \$418,850 is taxed at 32%. So \$89,000 is taxed at 32% which equals \$28,480.- The amount over \$418,850 and up to \$628,300 is taxed at 35%. Since the income is \$400,000, no taxation occurs in this bracket.- The amount over \$628,300 is taxed at 37%. Since the income is \$400,000, no taxation occurs in this bracket.The total tax accrued is the sum of all tax segments which equals \$2,000 + \$7,200 + \$20,405 + \$37,704 + \$28,480 = \$95,789.

A tax credit of \$4500 can now be applied. Subtract this from the amount obtained in Step 1: \$95,789 - \$4500 = \$91,289

The amount \$91,289 should be presented as the final tax that the couple has to pay after applying the tax credit. It is the result of subtracting the tax credit from the total tax charged on the taxable income.