Chapter 7
Lesson 7-1 Tax Tables,
Worksheets, and Schedules
Check Your Understanding (Example 1)
Check Your Understanding (Example 2)
Check Your Understanding (Example 3)
= $22,356.25
Extend Your Understanding (Example 3)
Applications
1. When you think of smart people, you may think
2c. $63,999 is at least $63,650 but less than
$64,000. The tax in the ‘married filing jointly’
column is $8,794.
2d. $57,521 is at least $57,500 but less than
$57,550. The tax in the ‘married filing separately’
column is $10,725.
3a. $60,124 is at least $60,100 but less than
4a. $57,555 is at least $57,550 but less than
household’ column contains $9,406 the taxable
column contains $11,538 the taxable income is
at least $60,750 but less than $60,800.
$60,650.
5e. From the table, the row where the ‘married filing
separately’ column contains $10,788 the taxable
6a.$400,000 is over $357,700.
6c. $108,962 is over $43,650 but not over $112,650.
6d. $201,102 is over $182,400 but not over
$42,755.00 + $6,171.66 = $48,926.66
7. By looking at the 25% tax bracket, the base tax
8. Try the 28% tax bracket.
9. $110,000 is over $43,650 but not over $112,650.
10. x is over $182,400 but not over $357,700.
$42,755.00 + 0.33(x – $182,400)
12. x is over $357,700.
13c. t is over $182,400 but not over $357,700.
$115,700 × 0.28 = $32,396
$23,225 + 0.28($115,700 – $112,650) =
$27,850. The tax in the ‘head of household’
column is $3,601.
19. $3,601 – $3,599.15 = $1.85; the computation
using Schedule Z is less.
$15,429.50 + 0.33($52,800) =
$15,429.50 + $17,424.00 = $32,853.50
Exercise 6:
Lesson 7-2 Modeling Tax
Schedules
Check Your Understanding (Example 1)
Check Your Understanding (Example 2)
Check Your Understanding (Example 3)
Check Your Understanding (Example 4)
Extend Your Understanding (Example 4)
Applications
1. Income taxes are workers’ taxes. Therefore, the
2. First interval:
tax schedule notation: Over $0 but not over
$8,025
interval notation: 0 < x ≤ 8,025
compound inequality notation: x > 8,025 and
x ≤ 32,550
Fourth interval:
Fifth interval:
tax schedule notation: Over $164,550 but not
compound inequality notation: x > 357,700
y = 40,052.25 + 0.33(x – 164,550)
y = 40,052.25 + 0.33x – 54,301.50
3b. The equations demonstrate the transformation
4. There are 3 cases.
When income is over $0 but not over $8,025,
Financial Algebra Solutions Manual Chapter 7 Page 105
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5. y = 23,965.50 + 0.31(x – 105,950)
6. There are 6 cases.
When income is over $0 but not over $15,100,
The piecewise function is
0.10 0 15,100
<≤
x
⎧
8. There are 5 cases.
y = 0.15x.
When income is over $25,350 but not over
( ) 13,896.50 0.31( 61,400) 61,400 128,100
== + − <≤
fx y x x
⎪
⎪
⎨
9. For the 25% tax bracket: y = 0.25x – 4,937.50,
y = 0.28x – 6,083.50
When income is over $150,150 but not over
y = 0.35x – 19,529.75
10b. The partially completed spreadsheet (missing
cells) is shown below.
B C D E F
2 x 28%
(0.28) 0.28x 6,083.50 0.28x –
6,083.50
11b. (0.35x–14212.5)(x≥178850)
12a. (4481.25+0.25(x–32550))(x>32550andx≤65725)
13a. From the graph, when taxable income is
$10,000 for each gridline. The y-axis (tax)
increases by about $2,500 for each gridline.
When x is $30,000, y is about $4,500.
$68,000
$44,828 + 0.33($79,700) = $44,828 + $26,301
= $71,129.
Lesson 7-3 Income Statements
Check Your Understanding (Example 1)
Check Your Understanding (Example 2)
Check Your Understanding (Example 3)
Check Your Understanding (Example 4)
Applications
1. The intent of Hopkins’s quote was to make a
2a. 45 – 40 = 5 overtime hours
2b. $384.75 × 0.062 ≈ $23.85
2c. $384.75 × 0.0145 ≈ $5.58
3e. $2,203.29 × 0.0365 ≈ $80.42
3f. $2,203.29 – $1,347.34 = $855.95
3g. 100% + 12.5% = 112.5% = 1.125
4. $1,900 + $4,500 = $6,400
$73,094.00 – $6,400 = $66,694
5g. A × D = AD
0.11B) = B – 0.062B – 0.0145B – C – D – E –
0.21B – 0.11B
6c. $74.09 × 18 = $1,333.62
6f. $216 ÷ 18 = $12
$400 × 26 = $10,400
$10,400 × 0.17 = $1,768
9. Box 1 income = x ÷ 0.0145 = 0.0145
x
11. $40,227 ÷ 0.33 = $121,900
Lesson 7-4 Forms 1040EZ and
Check Your Understanding (Example 1)
Extend Your Understanding (Example 1)
Check Your Understanding (Example 2)
Check Your Understanding (Example 3)
Extend Your Understanding (Example 3)
Check Your Understanding (Example 4)
Check Your Understanding (Example 5)
Check Your Understanding (Example 6)
Check Your Understanding (Example 7)
Financial Algebra Solutions Manual Chapter 7 Page 108
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Line 43 is $16,265.
$16,265 < $17,194
Line 47 is $17,194 – $16,265 = $929
Applications
1. Most people believe that their salary is personal
2. $13,956.95 > $11,874.82, so he will get a
3. $43,871.82 + $15,873.00 + $863.90 + $350.70 +
4a. $712 < $973, so she owes money.
4b. $973 – $712 = $261
7b. $16,381 < $15,238, so he gets a refund.
7c. $16,381 – $15,238= $1,143
9. Line 1 is $21,265.50.
Line 2 is $293.
Line 3 is blank.
Line 4 (adjusted gross income) is $21,965.50 +
$293 + $0 = $21,558.50, which rounds to
$21,559.
Lines 8a-9 are blank.
Line 11 (tax due) is $1,493.
$1,493 < $1,131, so tax is owed.
10. Line 2 (Box for Married filing jointly) is checked.
Line 6a (Box for Yourself) is checked.
Line 22 is $118,726.
Line 23 has no boxes checked.
Lines 29–34 and 36 are blank.
11. Line 1 is $42,126.76 + $66,199.00 + $850 =
$109,175.76.
Line 2 is $1,011.
12. Line 1 is $40,126 + $68,199 = $108,325.
Line 2 is $1,000.
Line 3 is blank.
Line 4 (adjusted gross income) is $108,325
13. Line 1 (Box for Single) is checked.
Line 6a (Box for Yourself) is checked.
Line 6c has 3 dependents listed.
The tax in the ‘single’ column is $2,003.
Line 28 (tax due) is $2,003.
Lines 29–34 and 36 are blank.
Lines 35 and 37 (total tax) are $2,003.
14. Line 4 (Box for Head of Household) is checked.
Line 6a (Box for Yourself) is checked.
Line 26 is $3,500 × 3 = $10,500.
Line 27 (taxable income) is $39,715 – $10,500 =
Line 45a is $7,955 – $3,811 = $4,144.
15. Line 2 (Box for Married filing jointly) is checked.
Line 6a (Box for Yourself) is checked.
Line 27 (taxable income) is $99,034 – $24,500 =
$74,534.
Lesson 7-5 Forms 1040 and
Schedules A and B
Check Your Understanding (Example 1)
Check Your Understanding (Example 2)
Check Your Understanding (Example 3)
Check Your Understanding (Example 4)
Check Your Understanding (Example 5)
Check Your Understanding (Example 6)
Check Your Understanding (Example 7)
Check Your Understanding (Example 8)
Extend Your Understanding (Example 8)
Check Your Understanding (Example 9)
Check Your Understanding (Example 10)
Applications
say. Knebel’s quote underscores how people
2. 7.5%
× $35,432 = 0.075 × $35,432 = $2,654.70
Insurance pays for 80% of the expenses, so
$1,140 < $2,654.70, so no deduction is allowed.
$63,150. The tax in the ‘single’ column is
$9,538.
$12,125 – $9,538 = $2,587
5. Use the tax computation worksheet on
Page 333.
$147,760 is over $112,650 but not over
$41,372.80 – $8,317 = $33,055.80, which
rounds to $33,056.
6a. $100,830 – $16,848 = $83,982
7e. $69,940 – $6,900 = $63,040
7f. $63,040 is at least $63,000 but less than
$63,050. The tax in the ‘head of household’
$12,100.
8. Start Form 1040:
Line 2 (Box for Married filing jointly) is checked.
Line 6a (Box for Yourself) is checked.
Schedule A:
= $1,031.20, which rounds to $1,031.
Line 21 is $400.
Line 22 is $175.
Back to Form 1040:
Line 38 is $108,658.
Line 39 is blank.
Line 40 is $14,391.
= $4,257.
9. Start Form 1040:
Line 2 (Box for Married filing jointly) is checked.
Line 6a (Box for Yourself) is checked.
Line 6b (Box for Spouse) is checked.
Line 6c has 2 dependents listed.
Line 6d = 2 + 2 = 4, so there are 4 exemptions.
= $8,650
Line 2 is $131,346.
Line 3 is $131,346 × 0.075 = $9,850.95.
Line 4 is $0 because $8,650 < $9,850.95.
Line 5 is $1,096 + $3,215 = $4,311.
Line 6 is $9,213.
Lines 7 and 8 are blank.
Line 28 is blank.
Line 29 has the box for No checked and is
$13,524 + $7,110 + $1,680 = $22,314.
Back to Form 1040:
Line 38 is $131,346.
Line 39 is blank.
Assessment
Really? Really! Revisited
1. Plot the data from page 327. Use 1993 as
Year 1, 1994 as Year 2, etc.
1993: April 21 = 91 + 20 = 111
2. Enter the ordered pairs into a graphing
calculator. Then use the statistics menu to
Applications
1. Use the tax computation worksheet on
Page 333.
2. 7.5% of the adjusted gross income is 0.075y.
They paid 0.2x of their medical expenses.
The amount of medical expenses over 7.5% of
$25,550 + 0.28($134,786 – $131,450) =
0.28x – $11,256 = $30,000
0.28x = $41,256
x ≈ $147,343
5. y = x × 0.25 – 4,937.50
y = 4,481.25 + 0.25(x – 32,550);
y = 4,481.25 + 0.25x – 8,137.50;
y = 0.25x – 3,656.25
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When income is over $178,850:
y = 48,385 + 0.35(x – 178,850);
y = 48,385 + 0.35x – 62,597.50;
⎪≥
⎪
⎩
0.35 – 14,212.50 when 178,850xx
7. 52 × ($50 + $90) = 52 × $140 = $7,280
8. $8,000 × 0.28 = $2,240
9. Medicare tax withheld is $1,405, so total income
= $1,405 ÷ 0.145 = $96,900. The amounts in
10. Line 2 (Box for Married filing jointly) is checked.
Line 6a (Box for Yourself) is checked.
Line 6b (Box for Spouse) is checked.
Line 38 is $9,800 + $11,500 = $21,300.
Lines 39–42 are blank. Line 43 is $21,300.
$11,319 < $21,300, so a refund is due.
Line 5 is $8,950.
Line 6 (taxable income) is $67,400 – $8,950
= $58,450.
Line 10 is $9,930.
$58,500. The tax in the ‘single’ column is
$10,983.
Line 6a (Box for Yourself) is checked.
Line 6b (Box for Spouse) is checked.
Line 6c has 3 dependents listed.
Line 6 is $8,219.
Lines 7 and 8 are blank.
Line 9 is $7,108 + $8,219 = $15,327.
Line 19 is $1,000 + $700 = $1,700.
Line 20 is $4,600 – $100 = $4,500;
$4,500 – 0.10($91,818); $3,850 < $4,681.80, so
the deduction is $0.
Line 38 is $91,818.
Line 39 is blank.
Line 40 is $23,656.
Line 41 is $91,818 – $23,656 = $68,162.
Line 42 is $3,500 × 5 = $17,500.
Line 46 is $6,799.
Lines 47–55 are blank.
Line 56 is $0.
Lines 57–60 are blank.
Line 61 is $6,799.