Federal Income Tax Laws That Cause Individuals’ Marginal and Statutory Tax Rates to Differ

• In Event: Innovations and Challenges in Teaching Tax

Abstract

This presentation will be about using a “phaseouts table” as a tax educational tool. The table compiles and summarizes the phaseouts of and limitations on deductions, credits, exclusions from income, and allowed contributions for individual U.S. federal income taxpayers in 2013. Phaseouts can cause individual taxpayers’ marginal tax rate (MTR) to be higher than their statutory tax rate (STR) (i.e., “bracket” based on taxable income). For each phaseout, the table includes how the phaseout works, the adjusted gross income (AGI) range for the phaseout, and the related formula to compute MTR, given STR. The table is appropriate for any course that covers either U.S. federal income taxation of individuals or tax planning. The phaseouts table is updated annually and is available upon request from the author. The full article, forthcoming in the Journal of Accounting Education, enables tax instructors to assist students in learning about phaseouts in an integrated, comprehensive manner. The article contains 15 application problems.

Author

• Gregory G Geisler, University of Missouri-St Louis