Question

Exercise 3-20 (Algorithmic) (L0,6) Compute the 2020 tax liability and the marginal and average tax rates for the following taxpayers Click here to access the 2020 tax rate schedule. If required, round the tax liability to the nearest dollarWhen required round the average rates to four decimal places before converting to a percentage (i.e..67073 would be rounded to - 6707 and entered as 67.07%).

a. Chandler, who files as a single taxpayer , has taxable income of 5127,600. Tax liability: % Marginal rate: Average rate

b. Lazare , who files as a of household , taxable income of $ 61,800 . Tax liabity Marginal rate: Average rate:

Answer 1

2020 Tax Rates are as follows

Rate	For Single Individuals, Taxable Income Over	For Heads of Households, Taxable Income Over
10%	$0	$0
12%	$9,875	$14,100
22%	$40,125	$53,700
24%	$85,525	$85,500
32%	$163,300	$163,300
35%	$207,350	$207,350
37%	$518,400	$518,400

a. Chandler, who files as a single taxpayer , has taxable income of 5127,600. Tax liability: % Marginal rate: Average rate

Taxable Income = $127,600

Tax Laibility = ($9,875 * 10%) + (($40,125 - $9,875) * 12%) + (($85,125 - $40,125)*22%) + (($127,600 - $85,525)*24%)

= $987.5 + $3,630 + $9,900 + $10,098

Tax Laibility = $24,615 .5 or $24,615

Margina Rate = 24%

Average Rate = (Income Tax / Total Income) * 100

= ($24,615 / $127,600) *100

Average Rate = 19.29%

b. Lazare , who files as a of household , taxable income of $ 61,800 . Tax liabity Marginal rate: Average rate:

Total Income = $61,800

Tax Liability = ($14,100 * 10%) + (($53,700 - $14,100) *12%) + (($61,800 - $53,700)*22%)

= $1,410 + $4,752 + $1,782

Tax Liability = $7,944

Marginal Rate = 22%

Average Rate = (Income Tax / Total Income) * 100

= ($7,944 / $61,800) *100

Average Rate = 12.85%

Note: I assumed that the taxable income given for Chandleris $127,600. I think 5127600 is a typo error.