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Use the table to answer the question. Sample IRS Tax Schedule, 20xx 2 GROSS TAXABLE EARNINGS, E TAXES DUE 3 Single 4 0 to 6,999.99 0.1E 5 7,000 to 28,399.99 0.15E − 350 6 28,400 to 68,799.99 0.25E − 3,190 7 68,800 to 143,499.99 0.28E − 5,254 8 143,500 to 311,949.99 0.33E − 12,429 9 311,950 and over 0.35E − 18,668 10 Head of Household 11 0 to 9,999.99 0.10E 12 10,000 to 38,049.99 0.15E − 500 13 38,050 to 98,249.99 0.25E − 4,305 14 98,250 to 159,099.99 0.28E − 7,252.50 15 159,100 to 311,949.99 0.33E − 15,207.50 16 311,950 and over 0.35E − 21,346.50 17 Married Filing Jointly 18 0 to 13,999.99 0.10E 19 14,000 to 56,799.99 0.15E − 700 20 56,800 to 114,649.99 0.25E − 6,380 21 114,650 to 174,699.99 0.28E − 9,819.50 22 174,700 to 311,949.99 0.33E − 18,554.50 23 311,950 and over 0.35E − 24,793.50 24 Married Filing Separately 25 0 to 6,999.99 0.10E 26 7,000 to 28,399.99 0.15E − 350 27 28,400 to 57,324.99 0.25E − 3,190 28 57,325 to 87,349.99 0.28E − 4,909.75 29 87,350 to 155,974.99 0.33E − 9,277.25 30 155,975 and over 0.35E − 12,396.75 Joshua Smith's income was $56,500. Compare his taxes due if he files as single to the amount due if he files as head of household. Show your work or explain how you got your answer.

1 answer

To determine Joshua Smith's taxes due based on his income of $56,500, we'll look at both filing options: "Single" and "Head of Household."

Filing as Single:

  1. Joshua's income falls within the range of $56,800 to $114,649.99.

  2. The tax formula for this range is: \[ \text{Taxes Due} = 0.25E - 6,380 \] where E is the gross taxable earnings.

  3. Plugging in Joshua's income: \[ \text{Taxes Due} = 0.25 \times 56,500 - 6,380 \] \[ = 14,125 - 6,380 \] \[ = 7,745 \]

Filing as Head of Household:

  1. Joshua's income of $56,500 falls within the range of $38,050 to $98,249.99.

  2. The tax formula for this range is: \[ \text{Taxes Due} = 0.25E - 4,305 \] where E is the gross taxable earnings.

  3. Plugging in Joshua's income: \[ \text{Taxes Due} = 0.25 \times 56,500 - 4,305 \] \[ = 14,125 - 4,305 \] \[ = 9,820 \]

Summary of Taxes Due:

  • Single filing: $7,745
  • Head of Household filing: $9,820

Comparison:

If Joshua files as Single, he would pay $7,745 in taxes, while as Head of Household, he would owe $9,820.

Thus, filing as Single is more favorable as it results in lower taxes due. The difference in taxes due when filing as Head of Household instead of Single is: \[ 9,820 - 7,745 = 2,075 \]

Joshua would save $2,075 in taxes if he files as Single.