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Chapter 8: Problem 13

a head of household with a taxable income of \(\$ 58,000\) and a \(\$ 6500\) tax credit

Short Answer

Expert verified
The amount due after applying the tax credit can be found by calculating the tax within each bracket for the taxable income, then subtracting the tax credit amount from this total tax owed.

Step by step solution

01

Determine Tax Bracket

The head of a household with a taxable income of $58,000 falls within the 12% tax bracket (for incomes from $13,850 to $52,850) and 22% (for incomes from $52,851 to $84,200) according to 2019 IRS Federal Tax Brackets.
02

Calculate Tax Owed

Calculate the amount of tax owed within the tax brackets. For the first part of the income ($13,850 to $52,850), 12% tax is owed and for the second part($52,851 to $58,000), 22% tax is owed. This calculation is performed as follows: \(0.12 \times (52850 - 13850) + 0.22 \times (58000 - 52850)\).
03

Subtract Tax Credit

Apply the given tax credit by subtracting the amount of the tax credit ($6500) from the amount of tax owed which has been calculated in step 2. The operation becomes: \([0.12 \times (52850 - 13850) + 0.22 \times (58000 - 52850)] - 6500 \)

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Most popular questions from this chapter

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