Questions: Use the 2021 marginal tax rates to compute the tax owed by the following individual. married filing separately with a taxable income of 158,000 The tax owed is

Solution Steps

To compute the tax owed by an individual who is married filing separately with a taxable income of $158,000 using the 2021 marginal tax rates, follow these steps:

1. Identify the applicable tax brackets for "married filing separately" status.
2. Calculate the tax owed for each portion of the income that falls within each tax bracket.
3. Sum the taxes from each bracket to get the total tax owed.

The 2021 marginal tax rates for an individual filing as married filing separately are as follows:

• \( 0\% \) on income up to \( \$9,950 \)
• \( 10\% \) on income from \( \$9,951 \) to \( \$40,525 \)
• \( 12\% \) on income from \( \$40,526 \) to \( \$86,375 \)
• \( 22\% \) on income from \( \$86,376 \) to \( \$164,925 \)
• \( 24\% \) on income from \( \$164,926 \) to \( \$209,425 \)
• \( 32\% \) on income from \( \$209,426 \) to \( \$314,150 \)
• \( 35\% \) on income from \( \$314,151 \) and above

Given a taxable income of \( \$158,000 \), we calculate the tax owed in each applicable bracket:

1. For income up to \( \$9,950 \): \[ \text{Tax} = 9,950 \times 0.10 = 995 \]

2. For income from \( \$9,951 \) to \( \$40,525 \): \[ \text{Tax} = (40,525 - 9,950) \times 0.12 = 3,669 \]

3. For income from \( \$40,526 \) to \( \$86,375 \): \[ \text{Tax} = (86,375 - 40,525) \times 0.22 = 10,086 \]

4. For income from \( \$86,376 \) to \( \$158,000 \): \[ \text{Tax} = (158,000 - 86,375) \times 0.24 = 17,290 \]

Now, we sum the taxes calculated from each bracket: \[ \text{Total Tax} = 995 + 3,669 + 10,086 + 17,290 = 31,040 \]

Final Answer