Federal Income Taxes

Exercises
1. Jessica’s gross income for a year included salary, RM12,400; commission, RM27,750; interest,
RM440. Her adjustments to income were payments to a retirement plan, RM2,000, and a
penalty for withdrawing savings early from a time-deposit account, RM126.

a. What was her gross income for the year?

b. Find her adjusted gross income for the year.

2. Find the amounts that are missing from this summary of an income tax return:
a. Gross income RM42,685
b. Adjustments to income RM3,670
c. Adjusted gross income X
d. Deductions RM8,978
e. Adjusted gross income less deductions Y
f. Exemptions RM12,400
g. Taxable income Z

3. Vince Bottolito's adjusted gross income on his federal tax return was RM53,748. He claimed
the standard deduction of RM4,850, and one exemption at RM3,100. What was Vince's taxable
income?

4. The Valek's gross income last year was RM64,890. They had adjustments to income totaling
RM3,829. Their deductions totaled RM12,502, and they had four exemptions at RM3,100 each.
Find their taxable income.

5. Ester Valdes earned RM19,450 from wages, RM4,000 from tips, and RM1,467 in interest last
year. She had adjustments to income of RM2,157. She claimed the standard deduction of
RM4,850 and a personal exemption for herself of RM3,100.

a. What was Ester's gross income?

b. What was her taxable income?
Average Tax Rate
Exercises

1. Find the average tax rate for James if his income is RM50 000.

Income Bracket Tax Rates Income Tax owed Average Tax Rate
RM0 – RM20 000 0%
RM20 001 – RM40 000 30%
RM40 001 – RM60 000 40%
RM60 001 and above 50%

2. Find the average tax rate for Jenny if her income is RM70 000

Income Bracket Tax Rates Income Tax owed Average Tax Rate
RM0 – RM20 000 0%
RM20 001 – RM40 000 30%
RM40 001 – RM60 000 40%
RM60 001 and above 50%

3. Refer to question 1. Calculate James’s marginal tax rate if his income increases to RM60 000.

Income Bracket Tax Rates Income Tax owed Marginal Tax Rate
RM0 – RM20 000 0%
RM20 001 – RM40 000 30%
RM40 001 – RM60 000 40%
RM60 001 and above 50%

4. Refer to question 2. Calculate Jenny’s marginal tax rate if her income increases to RM80 000.

Income Bracket Tax Rates Income Tax owed Marginal Tax Rate
RM0 – RM20 000 0%
RM20 001 – RM40 000 30%
RM40 001 – RM60 000 40%
RM60 001 and above 50%