To calculate the federal income tax, we will use the marginal tax rates. Here is how it will be calculated:
- For the first $8,925, you will be taxed at a rate of 10%.
Income tax for this bracket: 10% * $8,925 = $892.50
- For the amount between $8,925 and $36,250, you will be taxed at a rate of 15%.
Income tax for this bracket: 15% * ($36,250 - $8,925) = $3,538.25
- The remaining $1,602.30 is below the next tax bracket ($36,250 - $87,850), so the income tax for this bracket will be 0.
Total federal income tax: $892.50 + $3,538.25 + $0 = $4,430.75
The social security tax is calculated at a rate of 6.2% of the total income.
Social security tax: 6.2% * $1,602.30 = $99.30
The Medicare tax is calculated at a rate of 1.45% of the total income.
Medicare tax: 1.45% * $1,602.30 = $23.25
To find the net annual income after taxes, subtract the federal income tax, social security tax, and Medicare tax from the annual salary.
Net annual income after taxes: $1,602.30 - $4,430.75 - $99.30 - $23.25 = -$2,951
Since the net annual income after taxes is negative, the person would not have any net income after taxes.
$1,602.30
Calculate the taxes you would have to pay on this salary. Be sure to show your calculations.
First, find your annual income tax based on this rate schedule: ______________
2013 U.S. Federal Income Tax Rates for Single Adults
• 10% on taxable income from $0 to $8,925, plus
• 15% on taxable income over $8,925 to $36,250, plus
• 25% on taxable income over $36,250 to $87,850, plus
• 28% on taxable income over $87,850 to $183,250, plus
• 33% on taxable income over $183,250 to $398,350, plus
• 35% on taxable income over $398,350 to $400,000, plus
• 39.6% on taxable income over $400,000.
Then, find your annual social security tax (6.2 percent of total income): __________________
Next, find your annual Medicare tax (1.45 percent of total income): ___________________
Now find your net annual income after taxes (subtract your federal income tax, social security tax, and Medicare tax, from your annual salary: ____________________
Now that you’ve found your net annual income, divide this number by 12 to find your net monthly income: ___________________
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