Refer to the following table if necessary ?Click the icon to view the table Andy

Question

Refer to the following table if necessary ?Click the icon to view the table Andy earned $57,613 from wages as an engineer. Determine his overall tax rate on his gross income, including both FICA and income taxes. Assume he is single and takes the standard deduction. OA. 20.4% B. 21.2% ° C. 28.3% OD, 21.6% Data Table 2013 Marginal Tax Rates, Standard Deductlons, and Exemptlons Head of Household up to $12,750 up to $48,600 up to $125,450 up to $203,150 up to $398,350 up to $425,000 above $425,000 Married Filing Married Filing Separately up to $8925 Tax Rate 10% 15% 25% 28% 33% 35% 39.6% standard Single Jointly up to $8,925 up to $36,250 up to $87,850 up to $183,250 up to $398,350 up to $400,000 above $400,000 $6100 up to $17,850 up to $72,500 up to $36,250 up to $146,400 up to $73,200 up to $223,050 up to $111525 upto$398,350 up to $199,175 up to $450,000 up to $225,000 above $450,000 above $225,000 $12,200 $6100 $8950 deduction exemption $3900 $3900 $3900 $3900 (per person) Each higher marginal rate begins where the prior one leaves off. For example, for a single person, the 15% marginal rate affects income starting at $8925, which is where the 10% rate leaves off, and continuing up to $36,250. This table ignores the effects of ( exemption and deduction phase-outs that apply to high-income tax- payers and (i) the alternative minimum tax (AMT) that affects many middle- and high-income taxpayers.

Explanation / Answer

FICA TAX= 7.65%*57613=$4407.3945

Income tax excemptions $3900 and deductions $6100 as follows

taxable income=$57613-3900-6100=$47613

taxable income and 15% on the remaining amount upto 36250 and remaining amount 25%

47613-8925=$38688-36250=$2438

taxable amount=0.1*8925+0.15*36250+0.25*2438=$6939.5

total tax=$6939.5+$4407.3945=$11 346.8945

single deduction=taxable amount/total income=$11 346.8945/57613=20.4

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