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 $126,000 in salary. • She received $14,500 of dividend income. • She received $6,300 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 $5,600. • She received $8,500 from the sale of Google stock that was purchased 6 months prior to the sale at a cost of $6,100. • 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. the questions below. X Open spreadsheet 3. What is Mary's federal tax liability? Round your answer to the nearest cent. Do not round intermediate calculations. b. What is her marginal tax rate7 Round your answer to 1 decimal place. c. What is her average tax rate? Round your answer to 2 decimal places.

Answer 1

		Amnt$)	Amnt$)
	Salary	1,26,000
	Dividend Income	14,500
	Interest Income	6,300
	2 year back ( Disney Stock) = Sale value Long term - Stock Sales	21,000
	Long term Stock - Cost	5,600
	6 Month back ( Google Stock) = Sale value Short term - Stock Sales	8,500
	Short term Stock cost	6,100
	Mary receive - Personal Exemption	4,000
	allowable Itemized deduction	7,500
	Tax rate dividend + long term capital Gain	15%
	Calculate Federal Tax Liability
	need to calculate taxable Income
	Salary	1,26,000
	Interest Income	6,300
	Short Term capital Gain ( Sales - Cost ) $8500-$6100)	2,400
	Income before Personal Exemption and deduction	1,34,700
	Mary receive - Personal Exemption	4,000
	allowable Itemized deduction	7,500
	Taxable Income - before Dividend & Long Term Capital Gain	1,23,200
	As per Tax slab - Single Individual
	Taxable income $	Amount paid Base	% on excess pver basis
	37450	5,156	25%
	90750	18,481	28%
	189750	46,075	33%
	Tax liability ion Base	18,481
	Excess of Base ($123200-$90750)*28%	9,086
	Tax on Taxable Income before dividend and Long term capital Gain	27,567	A
	Add
	Divided Income	14,500
	Long term capital gain($21000-$5600)	15,400
	Total Dividend + LT capital Gain	29,900
	Tax on above Dividend + LT capital Gain	4,485	B
	($29900*15%)
Ansa	Total Federal Tax laibility	32,052	(A+B)=C1
	($27567+$4485)
Ans B	Margin Tax rate ( as above Tax slab)\	28%
Ans C
	Taxable Income - before Dividend & Long Term Capital Gain	1,34,700	C
	Total Dividend + LT capital Gain	29,900	D
	Average tax rate	19%
	($32052/($134700+29900)