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:

To determine why Gladys pays less federal income tax despite the same salary as Michelle, we analyze each option:

• Option a: Different tax brackets would mean different taxable income ranges, but same salary doesn't imply different brackets. Eliminate.
• Option b: The question is about federal tax, and state tax doesn't explain federal tax difference. Eliminate.
• Option c: Savings amount doesn't directly affect federal income tax liability (unless related to deductions, but this option doesn't specify that). Eliminate.
• Option d: Tax deductions and credits reduce taxable income or tax liability. If Gladys uses more deductions/credits, her tax paid would be less. This is a valid explanation.

Answer:

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