Tax Schedule

Taxable Income	Marginal Tax Rate
first $25,000	10%
from $25,000 to $75,000	15%
from $75,000 - $125,000	20%
from $125,000 - $175,000	25%
over $175,000	30%

Jim Schmeckems, a single head of household, had an annual income of $200,000. There were no exclusions or adjustments for tax purposes. The exemptions for Jim and his dependents total $10,000. His total itemized deductions amount to $26,000. The total standard deduction for his household is $12,500. Use the tax tables above to compute Jim's tax liability.

(No dollar signs or decimal points)

Q.2 Refer to the previous question. What if Jim had received a $15,000 commission check at the end of the year. How much in additional taxes would he owe? __________( no dollar signs, commas or decimal points)

^{(Note that this question is not asking for his new tax liability, but rather the ADDITIONAL taxes he would owe.)}

Q.3

Suppose the AMT were calculated in the following (oversimplified) way: 14.8% of AGI. What would Jim's tax liability be in this case as described in question 20 (i.e., ignore the commission check mentioned in question 21)? $__________ (No dollar signs, no decimal points)

Note that this question is asking for the actual tax liability, rather than the AMT, per se.

Q.4 Which of the following is false? A good plan for reducing your taxable income for the current year would be to:

A. Max out your Roth IRA.

B. Max out your 401(k) plan.

C. Invest in a "traditional" IRA

D. Buy a house

Q.5 I saw a great looking T-shirt the other day at Abercrombie & Fitch in the Annapolis Mall. It was on the clearance rack for $150. I have an opportunity to earn some money at 7-11 over the next couple of weeks. I think I'll take advantage of it to buy this shirt. Sales tax in Maryland is 6%. My average federal income tax rate is 24%. My income tax rate for the state of Maryland is 4% and for Prince George's County is 2%. The FICA tax rate I'd have to pay is 7% How much income must I earn to buy the shirt? (No dollar sign, two decimal points)

Personal And Family Finance