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Ch 7 Income Taxes

Ch 7 Income Taxes. 7.2 Modeling Tax Schedules. What the heck are tax schedules?. A tax schedule is a rate sheet used by individual tax payers to determine their estimated taxes due. There are four main schedules used Schedule X – single

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Ch 7 Income Taxes

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  1. Ch 7 Income Taxes 7.2 Modeling Tax Schedules

  2. What the heck are tax schedules? • A tax schedule is a rate sheet used by individual tax payers to determine their estimated taxes due. There are four main schedules used • Schedule X – single • Schedule Y-1 – married filed jointly/ qualifying widow • Schedule Y-2 – married filing separately • Schedule Z – head of household

  3. How does the tax schedule work?? • Sales tax is a flat tax, or a proportional tax meaning the tax rate does not depend on the cost of the item you purchase • The tax percentage remains the same whether you purchase a $10 or a $1000 item • Does a person with a taxable income of $13,000 pay the same percentage as the person you earns $13,000,000?? • No! There are different percentages on tax schedules

  4. How does the tax schedule work? • Progressive tax system means that the tax rate increases as the income increases • people with greater incomes are subject to higher tax rates on part of their income

  5. Tax Bracket • Each line of the tax schedule has a different percent, this percent is called a tax bracket • Many people would like to change the current progressive tax schedule to a flat tax system to simplify income taxes • Another option is a regressive tax schedule in which the tax rate decreases as income increases

  6. What do you think? • Which tax schedule do you think is appropriate for our society? • Why? • Discuss with your groups

  7. Example 1 • Model the schedule shown in tax schedule notation, interval notation, and compound inequality notation.

  8. Check your understanding • Write the tax schedule notation, interval notation, and compound inequality notation that would apply to an income of $172,876.99.

  9. Tax Equation

  10. Example 2 • How does the piecewise function relate to the tax computation worksheet?

  11. Check your understanding • The tax equation for incomes over $131,450 but not over $200,300 is y = 25,550 + 0.28(x − 131,450). Simplify the equation and explain the numerical significance of the slope and the y-intercept.

  12. Example 3 • Express the equations in the married taxpayers filing jointly schedule in y = mx + b form.

  13. Check your understanding • Use the appropriate equation from Example 3 to determine the tax for an income of $46,000.

  14. Example 4 0.10x 0 < x ≤ 16,050 0.15x − 802.5 16,050 < x ≤ 65,100 0.25x − 7,312.5 65,100 < x ≤ 131,450 f(x) = • Examine the piecewise function f(x) composed of the first three equations in Example 3. • Graph the function on the appropriate interval

  15. Check your understanding • If you were to graph the fourth equation in the piecewise function, y = 0.28x − 11,256, where would you expect the last point in that equation to be? Explain your reasoning.

  16. Ch 7 Asnmt 2 • Pg 340 #2 -11

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