Yvette is getting ready to do her taxes. She is single and lives in San Fransisco. Yvette earned $70,000 in 2015. She reviews the following table, which shows the IRS tax rates for a single taxpayer in 2015.On Annual Taxable Income...
The Tax Rate Is...
(Percent)
Up to $8,500 10
From $8,500 to $34,500 15
From $34,500 to $83,600 25
From $83,600 to $174,400 28
From $174,400 to $379,150 33
Over $379,150 35Based on the IRS table, Yvette calculates that her marginal tax rate is ? when her annual income is $70,000.
Yvette calculates that she owes ? in income taxes for 20115
Yvette then calculates that her average tax rate is ? , based on the annual income level and the amount of taxes she owes for 2015.
After figuring out what she owes in taxes in 2015, Yvette decides to ask an accountant for tax advice. The accountant claims that he has found a legal way to shelter $2,000 of taxable income from the federal government.
The maximum amount that Yvette is willing to pay to learn this strategy and reduce her taxable income by $2,000 is ? . (Hint: Sheltering some income means finding a legal way to avoid being charged income tax on that income. For example, someone who has $50,000 in income and shelters $10,000 pays income tax on only $40,000.)
