Formulas

Question 1

Tax equation

Answer 1

Tax =
= tax base * tax rate

$30 purchase, 6% sales tax rate =
$1.80 ($1.80 = $30 * 0.6)

Question 2

marginal tax rate equation

Answer 2

marginal tax rate =
= Change in tax / change in taxable income

= (new total tax - old total tax) / (new taxable income - old taxable income)

Question 3

average tax rate equation

Answer 3

average tax rate =
= total tax / taxable income

Question 4

effective tax rate equation

Answer 4

effective tax rate =
= total tax / total income

Question 5

propoertional tax rate equation

Answer 5

proportional tax rate =
= tax base * tax rate

Question 6

Individual income tax formula equation

Answer 6

taxes due or (refund) =
= Gross income - For AGI deductions = Adjusted gross income (AGI) - From AGI deductions = Taxable income * Tax rates = Income tax liability + Other taxes = Total tax - Credits - Prepayments = Taxes due or (refund)

Question 7

Individual income tax formula:
Adjusted gross income (AGI) equation

Answer 7

Adjusted gross income (AGI) =
= Gross income - For AGI deductions

Question 8

Individual income tax formula:
Taxable income equation

Answer 8

Taxable income =
= Adjusted gross income (AGI) - From AGI deductions

Question 9

Individual income tax formula:
Income tax liability equation

Answer 9

Income tax liability =
= Taxable income * Tax rate

Question 10

Individual income tax formula:
Total tax equation

Answer 10

Total tax =
= Income tax liability + Other taxes

Question 11

Individual income tax formula:
Taxes due or (refund) equation

Answer 11

Taxes due or (refund) =
= Total tax - Credits - Prepayments

Question 12

annuity exclusion ratio equation

Answer 12

annuity exclusion ratio =
= original invesment / expected value of annuity
= return of capital percentage

Question 13

formula for calculating gain (loss) from sale of an asset

Answer 13

gain (loss) on sale =
= sales proceeds
- selling expenses
= amount realized
- tax basis (investment) in property sold
= gain (loss) on sale