Ch 1 part 2 an introduction to tax

Question 1

Different ways to measure tax rates

Answer 1

Average tax rate
effective tax rate
marginal tax rate

Question 2

avg tax rate

Answer 2

total tax / taxable income

Question 3

effective tax rate

Answer 3

total tax / total income

Question 4

marginal tax rate

Answer 4

change in total tax / change in taxable income
* tax rate that applies to the next additional increment of a taxpayer’s taxable income

Question 5

Standard Deduction Example

Bill and Judy are married. Bill is 70 years old and Judy is 68 years old. Judy is also blind. What is their standard deduction, assuming they filing jointly?

Answer 5

$27,700 + 1,500 + 1,500 + 1,500 = $32,200

Question 6

Statute of Limitations Example

Johnny and Moira file their 2022 federal tax return on August 16, 2023, after receiving an automatic 6-month extension to file their return by October 15, 2023.

When does the statute of limitations end for their 2022 tax return?

Answer 6

August 16, 2026 (3 years after the actual filing date)