Question

1. Gill and Molly are married and for 2019, they each made $50,000 and $30,000 of taxable income in wages, respectively. In addition, Molly received $13,000 of interest income from a municipal bond investment that is not taxable. Use the appropriate Federal Tax Rate Schedule in Appendix D towards the back of your book to answer the following. Round dollar amounts to the nearest cent ($3,500.0372 → $3,500.04). Round percentages to the second decimal place (e.g. 35.027956% → 35.03%). a. What are Gill's total income and taxable income? b. What are Molly's total income and taxable income? c. Ignoring your answer in a. and b., if Gill and Molly file jointly as a married couple for 2019 and their total income is $120,000 and their total taxable income is $108,000:

Answer 1

Solution:

a. Gill's total income and taxable income = $50,000

b. Molly's total income = $30,000 wages + $13,000 (Interest income )

= $43,000

Molly's Taxable Income = $30,000 ( since, interest income form municipal bonds is not taxable)

C. They files jointly as a married couple, they comes under Schedule Y-1 above:

   Their total tax = $9,086 + ($108,000-78,950)×22% = $15,477

Average tax rate = $15,477 / 108,000 = 14.33%

Effective tax rate = $15,477 / $120,000 = 12.90%