Question:

Attempts Average 4 4 Taxes paid for a given income level

Last updated: 11/20/2023

Attempts Average 4 4 Taxes paid for a given income level Caroline is getting ready to do her taxes She is single and lives in Miami Caroline earned 250 000 in 2020 She reviews the following table which shows the IRS tax rates for a single taxpayer in 2020 On Annual Taxable Income Up to 9 875 From 9 875 to 40 125 From 40 125 to 85 525 From 85 525 to 163 300 From 163 300 to 207 500 From 207 500 to 518 400 The Tax Rate Is Percent 10 12 17 20 23 Caroline calculates that she owes approximately 30 Based on the IRS table Caroline calculates that her marginal tax rate is when her annual income is 250 000 in income taxes for 2020 Caroline then calculates that her average tax rate is approximately owes for 2020 based on the annual income level and the amount of taxes she After figuring out what she owes in taxes in 2020 Caroline decides to ask an accountant for tax advice The accountant claims that he has found a legal way to shelter 4 000 of taxable income from the federal government The maximum amount that Caroline is willing to pay to learn this strategy and reduce her taxable income by 4 000 is Sheltering some income means finding a legal way to avoid being charged income tax on that income For example someone who has 50 000 in Hint A