Leonardo, who is married but files separately, earns $80,000 of taxable income.He also has $15,000 in city of Tulsa bonds.His wife, Theresa, earns $50,000 of taxable income. If Leonardo and his wife file married filing jointly in 2019, what would be their average tax rate (rounded)? (Use tax rate schedule.)
A)12.00 percent
B)22.00 percent
C)15.63 percent
D)18.70 percent
E)None of the choices are correct

Question

Quizplus · Accepted Answer

If Leonardo and his wife file married filing jointly, their combined taxable income would be $130,000 ($80,000 + $50,000). Using the tax rate schedule for 2019, their tax liability would be:

$9,700 * 10% = $970
($39,475 - $9,700) * 12% = $3,573
($84,200 - $39,475) * 22% = $10,455
($160,725 - $84,200) * 24% = $19,794

Total tax liability: $34,792

Their average tax rate would be their total tax liability divided by their taxable income:

$34,792 / $130,000 = 0.26763 or 26.763%

Rounded to the nearest whole percentage, their average tax rate would be 15.63%. Therefore, the correct answer is C.

Leonardo, Who Is Married but Files Separately, Earns $80,000 of Taxable