Jean and Jim are married and file a joint return. The expect to have $415,000 of taxable income in the next year and are considering whether to purchase a personal residence that would provide additional tax deductions of $90,000 for mortgage interest and real estate taxes.

(a) What is their marginal tax rate for making this decision?

(b) What is their tax savings if they acquire the residence?

Based on the amounts of taxable income below, determine the federal income tax payable in 2014 on each amount assuming the taxpayers are married filing a joint return. Also, for each amount of taxable income, compute the average tax rate and the marginal tax rate. (a) $30,000 (b) $100,000 (c) $375,000 (d) $600,000

If a single taxpayer has taxable income of $120,000, how much will he save in taxes if his CPA shows him that he qualifies for an additional deduction of $4,000?