# Finance Example: Income Tax Calculation Use the 2014 marginal tax table shown on
the right to calculate the tax owed by a head of household with three dependents
whose details are given below. So we’re given the gross income, the adjustments,
and the fact that there is no itemized deductions and no tax credit for this
think of \$58,000, subtract off the adjustments, and then for the deductions,
since there’s no itemized deductions, we’ll automatically take the standard deduction, so we subtract off \$9100, and then for the exemptions, remember that each taxpayer gets an
exemption for themselves, and one for each dependent. So since this head
of household has three dependents, plus themselves, that’s a total of four exemptions, so we subtract off the amount of the exemption times four. Once we subtract off those
three categories, we find that the taxable income is \$33,100. Notice with the
with the taxable income of \$33,100, this taxpayer ends up in the 15% bracket,
so they fill up the 10% bracket, and the remainder is in second bracket,
the 15% bracket. So the first \$12,950 are taxed at 10%, the remaining
money from dollar 12,951 up through dollar number 33,100 gets taxed at 15%. So to find
the amount in that bracket, we subtract 33,100 minus 12,150, and we find that there’s \$20,150 in
that second bracket, so \$20,150 gets taxed at 15%. So for the first bracket, we
multiply \$12,950 times 10% or times 0.1, and we find that that’s \$1295. For the second bracket, we multiply that answer
(\$20,150) times 0.15 (15%) and we find that the tax from that bracket is
\$3022.50, so if we add those two together, we find the total tax owed
is \$4317.50. Since there’s no tax credits, we’re done. We’ve calculated the final tax owed, and that’s our final answer.