1. Calculate the taxes and average tax rate for a married couple family of four in the 15 percent bracket with a gross income of $63,000 (close to the national median for a family of four) with $4000 in IRA contributions, a standard deduction of $12,600, $16,200 for four exemptions and two child tax credits of $1000 each. You need to show the details of your calculations in order to receive full credit for this question. (Hint: use Table 4-3 to calculate the taxes, and refer to "Advice from a Seasoned Pro" in section 4.1d to see how the average tax rate is calculated.) 2. What is the marginal tax bracket? Explain why some taxpayers have an effective marginal tax rate as high as 40 percent? Does this mean they pay 40% of their taxable income in taxes?

Table 4-3 Filing Tax Table* If Taxable income Is Your Tax Is Married But Less At Least Single Jointly 25,000 25,050 3,290 2,826 25.050 25.100 3,298 2,834 25,100 25,150 3,305 2,841 27,850 27.900 3,718 3,254 27.900 27,950 3,725 3,261 30,000 30,050 4,040 3,576 30,050 30,100 4,048 3,584 30,100 30,150 4,055 3,591 30,150 30,200 4.063 3.599 39,600 39,650 5,678 5,016 39,650 39,700 5.690 5.024 39,700 39,750 5,703 5,031 39,750 39,800 5,715 5,039 40,200 40,250 5,328 5,106 40,250 40,300 5,340 5,114 47,800 47,850 7,228 6,246 47,850 47,900 7.240 6.254 48,550 48,600 7,915 6,359 48,600 48,650 7.928 6,366 48.900 48,950 7,503 6,411 48,950 49,000 8,015 6,419 49,200 49,250 8,078 6,456 49,250 49,300 8,090 6,464 53,050 53,100 9.040 7,034 53,100 53,150 9.063 7,041 56,050 56,100 9,875 7,484 56,100 56,150 9,803 7,491 59,000 59,050 10,528 7,926 59,050 59,100 10,540 7,934 74,100 74,150 14,303 10,191 74,150 74,200 14,315 10,199 90.200 90.250 18,328 14,099 90,250 90,300 18,340 14,111 *These segments of the tax table are derived from the IRS tax-rate schedule illustrated in Table 4-2. Table 4-3 Filing Tax Table* If Taxable income Is Your Tax Is Married But Less At Least Single Jointly 25,000 25,050 3,290 2,826 25.050 25.100 3,298 2,834 25,100 25,150 3,305 2,841 27,850 27.900 3,718 3,254 27.900 27,950 3,725 3,261 30,000 30,050 4,040 3,576 30,050 30,100 4,048 3,584 30,100 30,150 4,055 3,591 30,150 30,200 4.063 3.599 39,600 39,650 5,678 5,016 39,650 39,700 5.690 5.024 39,700 39,750 5,703 5,031 39,750 39,800 5,715 5,039 40,200 40,250 5,328 5,106 40,250 40,300 5,340 5,114 47,800 47,850 7,228 6,246 47,850 47,900 7.240 6.254 48,550 48,600 7,915 6,359 48,600 48,650 7.928 6,366 48.900 48,950 7,503 6,411 48,950 49,000 8,015 6,419 49,200 49,250 8,078 6,456 49,250 49,300 8,090 6,464 53,050 53,100 9.040 7,034 53,100 53,150 9.063 7,041 56,050 56,100 9,875 7,484 56,100 56,150 9,803 7,491 59,000 59,050 10,528 7,926 59,050 59,100 10,540 7,934 74,100 74,150 14,303 10,191 74,150 74,200 14,315 10,199 90.200 90.250 18,328 14,099 90,250 90,300 18,340 14,111 *These segments of the tax table are derived from the IRS tax-rate schedule illustrated in Table 4-2