Question

In: Economics

Question 1: Some political leaders would like to reduce the number of marginal tax brackets, but...

Question 1:

Some political leaders would like to reduce the number of marginal tax brackets, but how many federal income tax brackets are there today?

1

9

5

3

7

Question 2:

All of the following “adjustments” are commonly subtracted from a person’s total income (up to certain limits) and therefore are not included in a person’s adjusted gross income EXCEPT:

Contributions to IRAs (Individual Retirements Accounts)

Penalties for early withdrawal of savings

Mortgage interest paid

Student loan interest

Moving expenses to take a new job

Question 3:

There is an income threshold below which a person (or multi-person household) does not have to pay any federal income tax at all doesn’t even have to file a tax return. This amount, which can change a little from year to year, is not an arbitrary number. This number, which was $10,350 in 2016, represents which of the following:

Alternative minimum threshold

Poverty line

Personal exemption

Standard deduction

Personal exemption + standard deduction

Question 4:

Suppose that you are 50 years old and are involved in an accident. You have some basic health insurance, but you end up having to pay $30,000 in medical bills yourself (out of your own pocket). If your adjusted gross income if $100,000 and your itemized your deductions, how much, if anything, of your medical expenses can you include with your itemized deductions?

All $30,000

$20,000

$15,000

$10,000

$0

Solutions

Expert Solution

Question 1

Some political leaders would like to reduce the number of marginal tax brackets, but how many federal income tax brackets are there today -

Answer- The Federal income tax has 7 brackets, 10%, 15%, 25%, 28%, 33%, 35% & 39.6%.

Question - 2

All of the following “adjustments” are commonly subtracted from a person’s total income (up to certain limits) and therefore are not included in a person’s adjusted gross income EXCEPT:

Answer – Mortgage interest paid

It is deducted as an itemized deduction on the return. But if the gross income is $109,000 or more then this deduction is not allowed.

Question - 3

There is an income threshold below which a person (or multi-person household) does not have to pay any federal income tax at all doesn’t even have to file a tax return. This amount, which can change a little from year to year, is not an arbitrary number. This number, which was $10,350 in 2016, represents which of the following:

Answer – Personal Exemption + Standard deduction

The personal exemption is $4050 and the standard deduction is $6300. Hence this number is $10,350 , then it must include both personal exemption and standard deduction.

Question 4

Suppose that you are 50 years old and are involved in an accident. You have some basic health insurance, but you end up having to pay $30,000 in medical bills yourself (out of your own pocket). If your adjusted gross income if $100,000 and your itemized your deductions, how much, if anything, of your medical expenses can you include with your itemized deductions?

Answer - $20000

Itemized deductions cannot be reduced by more than 80% .


Related Solutions

The Tax Reform Act of 1986 is famous for reducing the number of tax brackets to...
The Tax Reform Act of 1986 is famous for reducing the number of tax brackets to just two and for lowering the top statutory tax rate to just 28 percent. Which subsequent tax act first raised the top statutory tax rate above 28 percent?
1) How are the historical tax rates/tax brackets different than the current tax rates/tax brackets today?...
1) How are the historical tax rates/tax brackets different than the current tax rates/tax brackets today? 2) How are the historical tax rates/tax brackets similar than the current tax rates/tax brackets today?
Corporate Tax Rate Schedule Taxable income brackets Tax calculation Base tax + (Marginal rate × amount...
Corporate Tax Rate Schedule Taxable income brackets Tax calculation Base tax + (Marginal rate × amount over bracket lower limit) $ 0 to $ 9,525 $ 0 + (10% × amount over $ 0) 9,525 to 38,700 $ 953 + (12% × amount over $ 9,525) 38,700 to 82,500 $ 4,454 + (22% × amount over $ 38,700) 82,500 to 157,500 $ 14,090 + (24% × amount over $ 82,500) 157,500 to 200,000 $ 32,090 + (32% × amount over...
40. To reduce income inequality, should the marginal tax rates on the top 1% be increased?
40. To reduce income inequality, should the marginal tax rates on the top 1% be increased?
I would like to know the detailed solution process and the answer to question number 1...
I would like to know the detailed solution process and the answer to question number 1 a,b. Please explain it. 1. Samsung and Sony have to decide whether they will increase the spending on Research and Development (R&D) Department in order to improve the features of their products which are sold worldwide. If they both increase the spending, the gains of doing so are zero for both. If only one of them increases the R&D budget while the other doesn’t,...
Question 1: A researcher would like to estimate the true mean number of hours adults sleep...
Question 1: A researcher would like to estimate the true mean number of hours adults sleep at night. Suppose that population sleep time is known to follow a Normal distribution with standard deviation as 1.5 hours. The researcher random select 100 people and found the average sleeping hours for the sample of 100 people is 6.5 hours. 1) Use this sample mean to estimate the true population mean of sleep time with 95% confidence. (hint: 95% CI) 2) If the...
Q1) The government seeks to reduce the emissions of gunk through a tax. The marginal benefits...
Q1) The government seeks to reduce the emissions of gunk through a tax. The marginal benefits of reducing gunk emissions are: MB = 30 – 1/3 Q Two firms emit gunk from their factories. The marginal costs of reducing emission of gunk for firms one and two are the following: MC1 = 4q1 and MC2 = 2q2 where q1 and q2 are, respectively, the amount of emissions reduced by the first and second firms. a) What are the total industry...
Pose a question like following that with some kind of uncertainty. Maybe environmental tax? An example...
Pose a question like following that with some kind of uncertainty. Maybe environmental tax? An example : Question: Why is unemployment insurance mandatory? I think this question pertains to the course because insurance is something that people buy to mitigate against uncertain outcomes. I suspect there might be some market failures due to moral hazard and/or adverse selection, and I would like to investigate these.
The effect of a tax on soda would: reduce production of soda create deadweight loss reduce...
The effect of a tax on soda would: reduce production of soda create deadweight loss reduce consumption of soda all of the above
1. A city instituted an educational program that hopefully would reduce the number of violent crimes...
1. A city instituted an educational program that hopefully would reduce the number of violent crimes committed in the city. The program is quite expensive, so the city wants to make sure that it is worthwhile. In the past (before the educational program was tried), the city experienced 5.2 violent crimes per day, on average. A few months after trying the educational program, the city randomly sampled 60 days and found the average of 4.5 violent crimes. Assume that the...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT