Question

consider michelle and gladys, two neighbors who each earn the same salary. gladys pays less in federal income taxes than michelle does. which of the following is a possible explanation for this?
a. michelle and gladys are in different tax brackets.
b. gladys pays less in federal income taxes, but michelle pays less in state income taxes.
c. gladys has more money in savings than michelle.
d. gladys is taking advantage of more deductions and credits than michelle.

please select the best answer from the choices provided

○ a
○ b
○ c
○ d

Explanation:

• Option a: Since they have the same salary, they should be in the same tax bracket, so this is incorrect.
• Option b: The question is about federal income taxes, and state taxes are irrelevant to explaining federal tax differences, so this is incorrect.
• Option c: Savings don't directly affect federal income tax liability (unless related to deductions/credits, which this option doesn't mention), so this is incorrect.
• Option d: Tax deductions and credits reduce taxable income or tax liability. If Gladys uses more of these, she can pay less federal income tax even with the same salary as Michelle.

Answer:

D. Gladys is taking advantage of more deductions and credits than Michelle.