# Step-by-Step Solution ## **Problem Recap** - **Taxpayers:** Benjamin andie Barker - **able Income:**120,000 - **Tax Year:** 2024 - **Filing Status:** Married Filing Jointly (MFJ) - **Other info:** W-2 wages = $150,000, Long-Term Capital Losses = $6,000 (already factored into taxable income). - **Task:** Calculate their tax using the **2024 tax brackets** for MFJ. Show the answer and the equation. --- ## **Step 1: Find the 2024 MFJ Tax Brackets** For 2024, **Married Filing Jointly (MFJ)** brackets are: | Tax Rate | Taxable Income (over) | But not over | |----------|----------------------|--------------| | 10% | $ | $23,200 | | 12% | $23,200 | $94,300 | | 22% | $94,300 | $201,050 | | 24% | $201,050 | $383,900 | | 32% | $383,900 | $487,450 | | 35% | $487,450 | $731,200 | | 37% | $731,200 | -- | Their taxable income of **$120,000** falls into the **22% bracket**. --- ## **Step 2: Apply the Tax Bracket Equation** **Equation for MFJ (2024):** > For taxable income **between $94,300 and $201,050**: > Tax = $10,852 + 22% of (taxable income − $94,300) --- ## **Step 3: Plug in the Numbers** - **Taxable income:** $120,000 - **Lower limit of bracket:** $94,300 - **Base tax up to lower limit:** $10,852 \[ \text{Tax} = \$10,852 + .22 \times (\$120,000 - \$94,300) \] --- ## **Step 4: Calculate** 1. Subtract lower limit: \[ \$120,000 - \$94,300 = \$25,700 \] 2. Multiply by 22%: \[ .22 \times \$25,700 = \$5,654 \] 3. Add to base tax: \[ \$10,852 + \$5,654 = \$16,506 \] --- ## **Final Answer** ### **Their 2024 federal income tax liability is:** \[ \boxed{\$16,506} \] ### **Equation Used:** \[ \text{Tax} = \$10,852 + .22 \times (\text{Taxable Income} - \$94,300) \] where Taxable Income = $120,000. --- #### **Summary Table** | Step | Amount | |----------------------|-------------| | Base Tax | $10,852 | | Amount over $94,300 | $25,700 | | 22% of Excess | $5,654 | | **Total Tax** | **$16,506** | --- **Note:** The W-2 wages and capital loss are already factored into the given taxable income. No further adjustment needed.

# Step-by-Step Solution ## **Problem Recap** - **Taxpayers:** Benjamin and Nellie Barker - **Taxable Income:** $120,000 - **Tax Year:** 2024 - **Filing Status:** Married Filing Jointly (MFJ) - **Other info:** W-2 wages = $150,000, Long-Term Capital Losses = $6,000 (already factored into taxable income). - **Task:** Calculate their tax using the **2024 tax brackets** for MFJ. Show the answer and the equation. --- ## **Step 1: Find the 2024 MFJ Tax Brackets** For the 2024 tax year, the **Married Filing Jointly (MFJ)** tax brackets are as follows: | Tax Rate | Taxable Income (over) | But not over | |----------|----------------------|--------------| | 10% | $0 | $23,200 | | 12% | $23,200 | $94,300 | | 22% | $94,300 | $201,050 | | 24% | $201,050 | $383,900 | | 32% | $383,900 | $487,450 | | 35% | $487,450 | $731,200 | | 37% | $731,200 | -- | ### **Explanation** This step establishes the relevant tax brackets for MFJ filers in 2024. We identify the bracket in which the taxable income of $120,000 falls, which is crucial for calculating the total tax owed. --- ## **Step 2: Apply the Tax Bracket Equation** **Equation for MFJ (2024):** > For taxable income **between $94,300 and $201,050**: > Tax = $10,852 + 22% of (taxable income − $94,300) ### **Explanation** This equation specifies how to compute the tax for incomes that fall within the identified bracket. It includes a base tax amount ($10,852) for the lower limit of the bracket and adds a percentage of the income that exceeds that limit. --- ## **Step 3: Plug in the Numbers** - **Taxable income:** $120,000 - **Lower limit of bracket:** $94,300 - **Base tax up to lower limit:** $10,852 \[ \text{Tax} = \$10,852 + 0.22 \times (\$120,000 - \$94,300) \] ### **Explanation** In this step, we substitute the known values into the tax equation. We take the base tax amount and calculate the additional tax owed based on the amount over the lower limit of the tax bracket. --- ## **Step 4: Calculate** 1. **Subtract lower limit:** \[ \$120,000 - \$94,300 = \$25,700 \] - This calculation finds the amount of taxable income that exceeds the lower limit of the bracket. 2. **Multiply by 22%:** \[ 0.22 \times \$25,700 = \$5,654 \] - Here, we calculate the additional tax owed based on the excess income. 3. **Add to base tax:** \[ \$10,852 + \$5,654 = \$16,506 \] - Finally, we sum the base tax and the additional tax to determine the total tax liability. ### **Explanation** Each calculation step builds upon the previous one to arrive at the total tax owed. The mix of addition and multiplication reflects how taxes are assessed based on bracketed income. --- ## **Final Answer** ### **Their 2024 federal income tax liability is:** \[ \boxed{\$16,506} \] ### **Equation Used:** \[ \text{Tax} = \$10,852 + 0.22 \times (\text{Taxable Income} - \$94,300) \] where Taxable Income = $120,000. --- #### **Summary Table** | Step | Amount | |----------------------|-------------| | Base Tax | $10,852 | | Amount over $94,300 | $25,700 | | 22% of Excess | $5,654 | | **Total Tax** | **$16,506** | --- **Note:** The W-2 wages and capital loss are already factored into the given taxable income. No further adjustment is needed.