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Kareem is married with 1 child and files taxes jointly with his wife. Their adjusted gross income is...

3. Kareem is married with 1 child and files taxes jointly with his wife. Their adjusted gross income is $92,600. The standard deduction is $12,600, and the amount of a personal exemption is $4,050. Determine the income tax that Kareem owes. The tax rate for Kareem is $1,855 plus 15% of the amount over $18,550.
A) $7,395
B) $1,855
C) $67,850
D) $9,250

Answer

First, calculate the taxable income:

  1. Adjusted Gross Income: $92,600
  2. Standard Deduction: $12,600
  3. Personal Exemption (for 3 people): $4,050 x 3 = $12,150
  4. Taxable Income = $92,600 - $12,600 - $12,150 = $67,850

Next, calculate the tax owed:

  1. Base tax: $1,855
  2. Amount over $18,550: $67,850 - $18,550 = $49,300
  3. 15% of $49,300 = $7,395
  4. Total tax = $1,855 + $7,395 = $9,250

Answer: D) $9,250

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