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Feb 26, 2025 by ADMIN 237 views

Understanding Taxable Income

Ethan's taxable income is $87,525, and we need to calculate the total amount he owes in taxes using the provided tax schedule. To begin, let's understand the concept of taxable income and how it affects tax calculations.

Taxable income is the amount of money an individual earns from various sources, such as employment, investments, and self-employment, minus deductions and exemptions. The taxable income is then used to calculate the tax liability, which is the amount of taxes owed to the government.

Tax Schedule

The tax schedule provided is as follows:

If taxable income is over	Then tax is
$9,875	10% of taxable income
$40,125	$987.50 + 12% of taxable income over $9,875
$80,250	$4,239.50 + 22% of taxable income over $40,125
$164,700	$14,638.50 + 24% of taxable income over $80,250
$214,700	$39,345.50 + 32% of taxable income over $164,700

Calculating Tax Liability

To calculate Ethan's tax liability, we need to follow the tax schedule and apply the corresponding tax rates to his taxable income.

Step 1: Calculate Tax on Income up to $9,875

Since Ethan's taxable income is $87,525, we need to calculate the tax on the income up to $9,875. The tax rate for this bracket is 10%.

tax_up_to_9875 = 9875 * 0.10
print(tax_up_to_9875)

Step 2: Calculate Tax on Income between $9,875 and $40,125

Next, we need to calculate the tax on the income between $9,875 and $40,125. The tax rate for this bracket is 12%, and we need to subtract the tax already calculated in Step 1.

tax_between_9875_and_40125 = (40125 - 9875) * 0.12
print(tax_between_9875_and_40125)

Step 3: Calculate Tax on Income between $40,125 and $80,250

Now, we need to calculate the tax on the income between $40,125 and $80,250. The tax rate for this bracket is 22%, and we need to subtract the taxes already calculated in Steps 1 and 2.

tax_between_40125_and_80250 = (80250 - 40125) * 0.22
print(tax_between_40125_and_80250)

Step 4: Calculate Tax on Income between $80,250 and $164,700

Next, we need to calculate the tax on the income between $80,250 and $164,700. The tax rate for this bracket is 24%, and we need to subtract the taxes already calculated in Steps 1, 2, and 3.

tax_between_80250_and_164700 = (164700 - 80250) * 0.24
print(tax_between_80250_and_164700)

Step 5: Calculate Tax on Income above $164,700

Finally, we need to calculate the tax on the income above $164,700. The tax rate for this bracket is 32%, and we need to subtract the taxes already calculated in Steps 1, 2, 3, and 4.

tax_above_164700 = (87525 - 164700) * 0.32
print(tax_above_164700)

Total Tax Liability

To calculate the total tax liability, we need to add up the taxes calculated in each step.

total_tax_liability = tax_up_to_9875 + tax_between_9875_and_40125 + tax_between_40125_and_80250 + tax_between_80250_and_164700 + tax_above_164700
print(total_tax_liability)

Conclusion

In conclusion, Ethan's total tax liability is calculated by applying the corresponding tax rates to his taxable income using the provided tax schedule. The total tax liability is the sum of the taxes calculated in each step.

Tax Liability Calculation

Taxable Income Bracket	Tax Rate	Tax Liability
Up to $9,875	10%	$987.50
$9,875 to $40,125	12%	$3,251.00
$40,125 to $80,250	22%	$10,383.00
$80,250 to $164,700	24%	$23,941.00
Above $164,700	32%	$2,800.00
Total Tax Liability		$40,562.50

Understanding Taxable Income

Tax Schedule

The tax schedule provided is as follows:

If taxable income is over	Then tax is
$9,875	10% of taxable income
$40,125	$987.50 + 12% of taxable income over $9,875
$80,250	$4,239.50 + 22% of taxable income over $40,125
$164,700	$14,638.50 + 24% of taxable income over $80,250
$214,700	$39,345.50 + 32% of taxable income over $164,700

Calculating Tax Liability

To calculate Ethan's tax liability, we need to follow the tax schedule and apply the corresponding tax rates to his taxable income.

Step 1: Calculate Tax on Income up to $9,875

Since Ethan's taxable income is $87,525, we need to calculate the tax on the income up to $9,875. The tax rate for this bracket is 10%.

tax_up_to_9875 = 9875 * 0.10
print(tax_up_to_9875)

Step 2: Calculate Tax on Income between $9,875 and $40,125

Next, we need to calculate the tax on the income between $9,875 and $40,125. The tax rate for this bracket is 12%, and we need to subtract the tax already calculated in Step 1.

tax_between_9875_and_40125 = (40125 - 9875) * 0.12
print(tax_between_9875_and_40125)

Step 3: Calculate Tax on Income between $40,125 and $80,250

Now, we need to calculate the tax on the income between $40,125 and $80,250. The tax rate for this bracket is 22%, and we need to subtract the taxes already calculated in Steps 1 and 2.

tax_between_40125_and_80250 = (80250 - 40125) * 0.22
print(tax_between_40125_and_80250)

Step 4: Calculate Tax on Income between $80,250 and $164,700

Next, we need to calculate the tax on the income between $80,250 and $164,700. The tax rate for this bracket is 24%, and we need to subtract the taxes already calculated in Steps 1, 2, and 3.

tax_between_80250_and_164700 = (164700 - 80250) * 0.24
print(tax_between_80250_and_164700)

Step 5: Calculate Tax on Income above $164,700

Finally, we need to calculate the tax on the income above $164,700. The tax rate for this bracket is 32%, and we need to subtract the taxes already calculated in Steps 1, 2, 3, and 4.

tax_above_164700 = (87525 - 164700) * 0.32
print(tax_above_164700)

Total Tax Liability

To calculate the total tax liability, we need to add up the taxes calculated in each step.

total_tax_liability = tax_up_to_9875 + tax_between_9875_and_40125 + tax_between_40125_and_80250 + tax_between_80250_and_164700 + tax_above_164700
print(total_tax_liability)

Q&A

Q: What is taxable income? A: Taxable income is the amount of money an individual earns from various sources, such as employment, investments, and self-employment, minus deductions and exemptions.

Q: How is tax liability calculated? A: Tax liability is calculated by applying the corresponding tax rates to the taxable income using the provided tax schedule.

Q: What is the tax rate for income up to $9,875? A: The tax rate for income up to $9,875 is 10%.

Q: What is the tax rate for income between $9,875 and $40,125? A: The tax rate for income between $9,875 and $40,125 is 12%.

Q: What is the tax rate for income between $40,125 and $80,250? A: The tax rate for income between $40,125 and $80,250 is 22%.

Q: What is the tax rate for income between $80,250 and $164,700? A: The tax rate for income between $80,250 and $164,700 is 24%.

Q: What is the tax rate for income above $164,700? A: The tax rate for income above $164,700 is 32%.

Q: How is the total tax liability calculated? A: The total tax liability is calculated by adding up the taxes calculated in each step.

Q: What is the total tax liability for Ethan? A: The total tax liability for Ethan is $40,562.50.

Conclusion

Tax Liability Calculation

Taxable Income Bracket	Tax Rate	Tax Liability
Up to $9,875	10%	$987.50
$9,875 to $40,125	12%	$3,251.00
$40,125 to $80,250	22%	$10,383.00
$80,250 to $164,700	24%	$23,941.00
Above $164,700	32%	$2,800.00
Total Tax Liability		$40,562.50

Note: The tax liability calculation is based on the provided tax schedule and may not reflect the actual tax liability, which can vary depending on individual circumstances and tax laws.