Question

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Linette, a single taxpayer, had the following income and deductions for the tax year 2018: 囲click the icon to view the income and deductions.) Click the icon to view/ the standard deductio Read the requirements Requirement a. Compute Linette's taxable income and federal tax liability for 2018. First calculate the gross income, then calculate taxable income and the federal tax liability. (Calculate the is not used in the table, leave the input field empty, do not select a label or enter a zero.) Total income from whatever source derived Minus: Exclusions, as provided in the tax lavw Gross income

Answer 1

Ans-a-

Particulars	Amount ($)
Salary	65,000
Business Income	22,000
Interest Income for taxable bonds	12,000
Total Income (A)	99,000
Deductions:-
Business Expenses	11,500
Itemized deductions	15,000
Total deductions (B)	26,500
Taxable Income (A)-(B)	72,500
Tax Rate	22%
Tax	$11,890

Tax Computation

Particulars	Income	Rate	Tax
For First	$9,525	10%	$952.50
Next ($38,700-$9,525)	$29,175	12%	$3,501
Final Amount ($72,500-$38,700)	$33,800	22%	$7,436
	$72,500		$11,889.50 or $11,890

Ans-b-

Marginal Rate	22%	(From Tax Rate Schedule)
Average Tax Rate	16.4%	($11,890/ $72,500)
Effective Tax Rate	12.9%	($11,890/ ($99,000+$4,700-$11,500))

Ans-c-

The marginal tax rate is most important for tax planning purposes because tax planning is done at the margin and an appropriate marginal tax rate yields that how much a tax payer can save through tax planning.

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