Mitch, a single taxpayer, earns $100,000 in taxable income and $10,000 in interest from an investment in city of Birmingham Bonds. Using the U. S. tax rate schedule for year 2018, how much federal tax will he owe? (Tax rate schedule) A) $28,000. B) $21,175.75. C) $16,712.50. D) $25,000. E) None of the above.

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Jaelynn Kline

7 September, 08:20

Mitch, a single taxpayer, earns $100,000 in taxable income and $10,000 in interest from an investment in city of Birmingham Bonds. Using the U. S. tax rate schedule for year 2018, how much federal tax will he owe? (Tax rate schedule) A) $28,000. B) $21,175.75. C) $16,712.50. D) $25,000. E) None of the above.

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Galloway · Answer 1

The answer is: E) None of the above

Explanation:

Mitch's earnings fall into the third category set by the IRS for taxable income:

earnings between: $78,951 - $168,400

taxes due: $9,086 + (22% of the amount over $78,950)

= $9,086 + (22% x $21,050)

= $9,086 + $4,631

federal taxes due = $13,717

Since Mitch earns $10,000 in interest from a municipal bond (city of Birmingham), he is except from paying federal taxes for that income.