For 2017, Tom has taxable income of $48,005 . When he uses the Tax Tables, Tom finds that his tax liability is higher than under the Tax Rate Schedules
a. Why is there a difference?
b. Can Tom use the Tax Rate Schedules?
a.
Even though the Tax Tables are based on the Tax Rate Schedules, minor differences in the tax liabilities will result. The variance is due to the fact that the tax for any table bracket amount is determined by using the midpoint amount. In Tom's case, the tax on the $48,000 – $48,050 bracket is the tax on $48,025 . Because Tom's taxable income (i.e., $48,005) is below $48,025, his tax will be higher.
b. No. Unless taxable income is $100,000 or more (or in some other special situations), taxpayers must use the Tax Tables.
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