Question

Jason and Jill are married and have a six-year-old daughter. During the year, they sell one acre of land for $80,000. Three years ago, they paid $70,000 for two acres of land. Their other income and deductions are as follows:

Jill's commissions $82,000 Jason's salary 46,000 Dividend income 5,000 Interest income 8,000 Short-term loss on sale of stock in Nippon Inc. (15,000) Deductions for adjusted gross income 28,000

The standard deduction is $24,000 for married taxpayers filing jointly. The personal and dependency exemptions have been eliminated for 2018. Dividends and net long-term capital gains are taxed at a rate of 15%. Refer to the Tax schedules table to answer the following question.

Round intermediate calculations to the nearest dollar.

Jason and Jill's taxable income is $. ---------The tax on their eligible dividends and capital gains is $----------- and total income tax liability is $ ------------for the current year.

I was able to calculate their taxable income as 119000, and tax on dividends and capital gains as $ 5250, and both are correct. But I cannot get the correct answer for total income tax liability. Please include explaination, thanks!

Answer 1

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Answer is highlighted in yellow: As per Tax year 2018: Solution: Taxable income Less: Income with preferred rate (5250/15%) Taxable income with regular rate Regular tax - (8907)+(84000-77400)*22% Add: Tax on dividends and capital gain Total income tax liability is (10359+5250) $ $ $ $ $ 119000 35,000 84,000 10,359 5,250 15,609