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The Millers, a family of four (with two young child) filing a joint tax return, have the following information to prepare their federal income tax
The Millers, a family of four (with two young child) filing a joint tax return, have the following information to prepare their federal income tax return for 2016: Total Income $110, 000 State and local income taxes $6, 000 Property tax $4, 000 Home mortgage interest $8, 000 Contribution to charities $2, 000 Interest on student loans $2, 000 Contribution to their 401(k) retirement account: $8, 000 For tax year 2016: Standard deduction for a married couple: $12, 000: Personal exemption: $5, 000 per person: Child tax credit: $1, 000 per child: The tax brackets, which apply to the Millers, are: for taxable income from $0 to $20, 000, the tax rate was 10%: from $20, 000 to $60, 000, the tax rate was 20%: from $60, 000 to $100, 000 the tax rate was 30%. Please compute the following for tax year for the Miller family: A) Adjusted gross income: B) Taxable income: C) Tax owed to the federal government: D) Marginal tax rate: and E) Average tax rate. If this family's income increases by $10, 000 in 2017, and if all other information remains the same (for the sake of simplicity) in 2017, how much will this family's federal income tax increase by in 2016? Please use the marginal tax rate concept to answer this
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