Question

Lacy is a single taxpayer. In 2018, her taxable income is $46,800. What is her tax liability in each of the following alternative situations? Use Tax Rate Schedule, Dividends and Capital Gains Tax Rates, Estates and Trusts for reference. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

a. All of her income is salary from her employer.​ Tax liability:$____________

b. Her $46,800 of taxable income includes $1,400 of qualified dividends. Tax liability:$____________

c. Her $46,800 of taxable income includes $10,200 of qualified dividends Tax liability:$____________________

Individuals

Schedule X-Single

If taxable income is over:	But not over:	The tax is:
$           0	$    9,525	10% of taxable income
$    9,525	$ 38,700	$952.50 plus 12% of the excess over $9,525
$ 38,700	$ 82,500	$4,453.50 plus 22% of the excess over $38,700
$ 82,500	$157,500	$14,089.50 plus 24% of the excess over $82,500
$157,500	$200,000	$32,089.50 plus 32% of the excess over $157,500
$200,000	$500,000	$45,689.50 plus 35% of the excess over $200,000
$500,000	—	$150,689.50 plus 37% of the excess over $500,000

Schedule Y-1-Married Filing Jointly or Qualifying Widow(er)

If taxable income is over:	But not over:	The tax is:
$           0	$ 19,050	10% of taxable income
$ 19,050	$ 77,400	$1,905 plus 12% of the excess over $19,050
$ 77,400	$165,000	$8,907 plus 22% of the excess over $77,400
$165,000	$315,000	$28,179 plus 24% of the excess over $165,000
$315,000	$400,000	$64,179 plus 32% of the excess over $315,000
$400,000	$600,000	$91,379 plus 35% of the excess over $400,000
$600,000	—	$161,379 plus 37% of the excess over $600,000

Schedule Z-Head of Household

If taxable income is over:	But not over:	The tax is:
$           0	$ 13,600	10% of taxable income
$ 13,600	$ 51,800	$1,360 plus 12% of the excess over $13,600
$ 51,800	$ 82,500	$5,944 plus 22% of the excess over $51,800
$ 82,500	$157,500	$12,698 plus 24% of the excess over $82,500
$157,500	$200,000	$30,698 plus 32% of the excess over $157,500
$200,000	$500,000	$44,298 plus 35% of the excess over $200,000
$500,000	—	$149,298 plus 37% of the excess over $500,000

Schedule Y-2-Married Filing Separately

If taxable income is over:	But not over:	The tax is:
$           0	$    9,525	10% of taxable income
$    9,525	$ 38,700	$952.50 plus 12% of the excess over $9,525
$ 38,700	$ 82,500	$4,453.50 plus 22% of the excess over $38,700
$ 82,500	$157,500	$14,089.50 plus 24% of the excess over $82,500
$157,500	$200,000	$32,089.50 plus 32% of the excess over $157,500
$200,000	$300,000	$45,689.50 plus 35% of the excess over $200,000
$300,000	—	$80,689.50 plus 37% of the excess over $300,000

Tax Rates for Net Capital Gains and Qualified Dividends

Rate*	Taxable Income
	Married Filing Jointly	Married Filing Separately	Single	Head of Household	Trusts and Estates
0%	$0 - $77,200	$0 - $38,600	$0 - $38,600	$0 - $51,700	$0 - $2,600
15%	$77,201 - $479,000	$38,601 - $239,500	$38,601 - $425,800	$51,701 - $452,400	$2,601 - $12,700
20%	$479,000+	$239,500+	$425,801+	$452,401+	$12,701+

*This rate applies to the net capital gains and qualified dividends that fall within the range of taxable income specified in the table (net capital gains and qualified dividends are included in taxable income last for this purpose).

Estates and Trusts But not The tax is: If taxable income is over: Over: $ 0 $ 2,550 10% of taxable income $ 2,550 $ 9,150 $255 plus 24% of the excess over $2,550 $ 9,150 $12,500 $1,839 plus 35% of the excess over $9,150 $12,500 $3,011.50 plus 37% of the excess over $12,500

Answer 1

Ans (a) : Total Taxable Income= $46,800.

Tax Calculation

             Tax due= $ 4,453.50+($ 46,800- $ 38,700)*22/100

                         =$ 4,453.50 +$1782

             Tax Payable= $ 6235.50

Reason : As the Tax payer id Individual and her income is falling under the tax slab of $ 38700 to $ 82,700.

Ans (b) : Total Taxable Income=$ 46,800

                Qualified Dividend=$ 1400

Tax Calculation

Tax due= $ 4,453.50+($ 46,800- $ 38,700)*22/100

                         =$ 4,453.50 +$1782

             Tax Payable= $ 6235.50

Tax due on Qualified Dividend= $ 1400*15/100

Total Tax Due=$ 6235.50+$210

Net Tax Due=$6445.50

Reason : As the Tax payer Individual income is falling under the tax slab of $ 38700 to $ 82,700.

              And for calculation of tax on dividend we will take the slab of $38,601 to $ 4,25,800.

Ans (C) : Total Taxable Income= $ 46,800

                  Qualified Dividend = $ 10,200

Tax Calculation

Tax due= $ 4,453.50+($ 46,800- $ 38,700)*22/100

                         =$ 4,453.50 +$1782

             Tax Payable= $ 6235.50

Tax due on Qualified Dividend= $10200*15/100=$ 1530

Total Tax Due=$ 6235.50 + $ 1530=$ 7,765.50

Reason : As the Tax payer Individual income is falling under the tax slab of $ 38700 to $ 82,700.

              And for calculation of tax on dividend we will take the slab of $38,601 to $ 4,25,800.