Questions: Use the 2021 marginal tax rates to compute the tax owed by the following individual. Married filing separately with a taxable income of 163,000. The tax owed is (Type an integer or a decimal. Round to the nearest cent as needed.)

Solution Steps

To compute the tax owed by an individual who is married filing separately with a taxable income of $163,000 using the 2021 marginal tax rates, we need to apply the tax rates to the income brackets sequentially. We will calculate the tax for each bracket up to the taxable income and sum these amounts to get the total tax owed.

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

• \( 0 \) to \( 9,950 \): \( 10\% \)
• \( 9,951 \) to \( 40,525 \): \( 12\% \)
• \( 40,526 \) to \( 86,375 \): \( 22\% \)
• \( 86,376 \) to \( 164,925 \): \( 24\% \)
• \( 164,926 \) to \( 209,425 \): \( 32\% \)
• \( 209,426 \) to \( 314,150 \): \( 35\% \)
• \( 314,151 \) and above: \( 37\% \)

Given a taxable income of \( 163,000 \), we calculate the tax owed for each applicable bracket:

1. For the first bracket: \[ \text{Tax} = 9,950 \times 0.10 = 995 \]

2. For the second bracket: \[ \text{Tax} = (40,525 - 9,950) \times 0.12 = 3,669 \]

3. For the third bracket: \[ \text{Tax} = (86,375 - 40,525) \times 0.22 = 10,086 \]

4. For the fourth bracket: \[ \text{Tax} = (163,000 - 86,375) \times 0.24 = 18,391 \]

Now, we sum the tax amounts calculated for each bracket: \[ \text{Total Tax} = 995 + 3,669 + 10,086 + 18,391 = 33,141 \]

Final Answer