Question

Excel Online Structured Activity: Personal taxes

Mary Jarvis is a single individual who is working on filing her tax return for the previous year. She has assembled the following relevant information:

• She received $103,000 in salary.
• She received $10,000 of dividend income.
• She received $5,200 of interest income on Home Depot bonds.
• She received $21,000 from the sale of Disney stock that was purchased 2 years prior to the sale at a cost of $6,400.
• She received $13,500 from the sale of Google stock that was purchased 6 months prior to the sale at a cost of $5,000.
• Mary receives one exemption ($4,000), and she has allowable itemized deductions of $7,500. These amounts will be deducted from her gross income to determine her taxable income.

Assume that her tax rates are based on Table 3.5. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the questions below.

Open spreadsheet

1. What is Mary's federal tax liability? Round your answer to the nearest cent. Do not round intermediate calculations.

   $

2. What is her marginal tax rate? Round your answer to 1 decimal place.

   %

3. What is her average tax rate? Round your answer to 2 decimal places.

   %

Answer 1

Mary's federal tax liability
Salary	103000
Dividend Income	0
Interest income.	5200
Capital Gain
Disney Stock	14600
Google Stock	8500
Taxable Income	131300
Deduction	11500
Net Taxable	119800
Tax Liablity	27068
Her Marginal Tax rate is:
Upto 84200	22%
84200-160725	24%
Average Tax Rate
Taxable Income	119800
Tax liablity	27068
Avg	22.59