How exactly do tax brackets work? When we file our taxes, where does the number for total tax come from? In this activity, you will practice calculating your taxable income, reading a tax bracket table, and finding your total tax due based on how much you made in the calendar year.
Part I: Interactive Examples
These two videos provide information on how to calculate an estimated tax due. Watch each video and answer the questions below it.
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Question 1
1.
Which of the following statements about taxable income is TRUE?
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3 points
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Question 2
2.
What information from the tax bracket table do we need to calculate total tax? [Select all that apply]
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Question 3
3.
Which of the following statements about tax rates is TRUE?
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3 points
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Question 4
4.
Where do the numbers 9,700 and 23,100 come from?
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Question 5
5.
If Mario's gross income is $80,000, what is his taxable income?
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Question 6
6.
Which tax bracket(s) do we need to calculate his total tax? (Select all that apply)
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Question 7
7.
Where can we draw another line to represent the second bracket taxed at 12%?
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Question 8
8.
What expression can we use to represent the tax for the last bracket
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Question 9
9.
What is Mario's total tax due?
Part II: Practice Problems
Use the tax bracket table below to calculate each person’s total tax for 2022 (NOTE: The videos in Part I were calculated for 2019). Complete the following practice problems by showing your work in the space provided. Then, write your final solution in the answer box.
For Questions, 1-3, assume the characters are single filers and not claimed as dependent on someone else’s tax return.
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20 points
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Question 10
10.
Felix has a gross income of $18,000. What is his total federal tax burden?
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Question 11
11.
Sarina made $42,000 in the calendar year. How much does she owe in federal taxes?
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20 points
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Question 12
12.
Alex and Tory are married and filing jointly. This means their standard deduction is 24,400. Be sure to use the second column to determine the proper brackets. Their gross income is $150,000. How much do they owe in federal taxes?
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20 points
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Question 13
13.
Kennedy has a gross income of $95,000. What is her total federal tax burden?
Day 2/10/23
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20 points
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Question 14
14.
Liam has a gross income of $120,000 and takes the standard deduction. What are his total federal taxes due?
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Question 15
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Liam has a gross income of $120,000 and takes the standard deduction. Over the course of the year, he paid $21,556 in federal taxes. Based on your answer from question 14, does he still owe more money or does he have a refund coming?_______
What is the amount of owed taxes or refund?_______
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20 points
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Question 16
16.
Aiden has a gross income of $503,000 and takes the standard deduction. How much do they owe in federal taxes?
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Question 17
17.
Aiden has a gross income of $503,000 and takes the standard deduction. Over the course of the year, they paid $138,225 in federal taxes. Based on your answer from question 16, do they still owe more money or do they have a refund coming?_______
What is the amount of owed taxes or refund?_______
Part III: Reflection
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Question 18
18.
Explain the difference between the common misconception that people might have about how tax brackets work and how they actually work.
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20 points
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Question 19
19.
Reflect on your process for calculating the total tax due.
What is one mathematical strategy you can use to make the repeated calculations more efficient? _______
Why would that be faster?_______
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10 points
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Question 20
20.
It’s helpful to know the background of how much you owe in federal taxes by calculating by hand. What is another way that people can look up how much they owe?
