Federal Income Tax Calculations

The video tutorial explains how to calculate federal income taxes using examples of Karen, John, and Sally. It covers tax brackets, deductions, and credits, and demonstrates the impact of these on taxable income. The tutorial also includes calculations for FICA taxes and state income taxes, concluding with an explanation of the effective tax rate.

What is the first step in calculating federal income tax for Karen's income?

• Multiply the total income by the highest tax rate

• Subtract deductions from the total income

• Look at the first row of the tax rate table

• Add all income sources together

How much does Karen pay in federal income tax on the first $9,525 of her income?

• $1,000.00

• $900.00

• $952.50

• $1,200.00

What is John's net income if his revenue is $170,000 and his business expenses are $50,000?

• $150,000

• $120,000

• $100,000

• $130,000

How does a tax deduction affect John's taxable income?

• It doubles the taxable income

• It increases the taxable income

• It reduces the taxable income

• It has no effect on taxable income

What is the main advantage of a tax credit over a tax deduction?

• It reduces the tax bill directly

• It increases the taxable income

• It applies only to business expenses

• It has no effect on the tax bill

How much does Sally pay in federal income tax on the first $9,525 of her income?

• $952.50

• $1,000.00

• $1,200.00

• $900.00

What is the tax rate Sally pays on income between $82,500 and $157,500?

• 22%

• 24%

• 10%

• 32%

What percentage does Sally pay for Social Security taxes on her income?

• 15.3%

• 2.9%

• 6.2%

• 12.4%

How much does Sally pay in Medicare taxes on her $200,000 income?

• $7,000

• $6,000

• $4,500

• $5,800

What is Sally's effective tax rate if her total tax bill is $79,221.10 and her taxable income is $200,000?

• 37.0%

• 38.5%

• 40.0%

• 39.6%