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 2018,what would be their average tax rate (rounded)? (Use tax rate schedule)
A)12.00%
B)22.00%
C)15.75%
D)14.12%
E)None of the choices are correct.

Question

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 2018,what would be their average tax rate (rounded)? (Use tax rate schedule)
A)12.00%
B)22.00%
C)15.75%
D)14.12%
E)None of the choices are correct.

Quizplus · Accepted Answer

Using the 2018 tax rate schedule for married filing jointly, their total taxable income is $130,000 ($80,000 + $50,000).

Their tax liability would be:

- $9,525 on the first $19,050 of taxable income (10% tax rate)
- $29,175 on the next $58,350 of taxable income (12% tax rate)
- $19,900 on the next $77,600 of taxable income (22% tax rate)
- Total tax liability of $58,600

Their average tax rate would be:

- $58,600 ÷ $130,000 = 0.4515 (or 45.15%)
- Rounded to the nearest whole percent, their average tax rate is 15.75%, which corresponds to choice C.

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