Question

Required information [The following information applies to the questions displayed below.] Lacy is a single taxpayer. In 2020, her taxable income is $43,200. 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.) b. Her $43,200 of taxable income includes $2,200 of qualified dividends. Tax liability

Answer 1

Ans:

B). Taxable income=43,200

Qualified Dividends= 2,200

Income Taxable at ordinary Rate= 41,000

Status= Single

Tax on Ordinary= $4,617.50+22% of {41,000-40,125}

=> $4,617.50+ 22% of 875

=> $4,617.50+ 192.50

=> $ 4,810

Tax on Qualified Dividends= {43,200-40,000}*15%

=> 3,200*15%

=> 480

Total Tax liability= $5,290

C). Taxable income 43,200

Qualified Dividends= 6,200

Income At ordinary rates= 37,000

Tax on ordinary= $987.50+12% of {37,000-9,875}

=> $987.50+ 12% of 27,125

=> $987.50+ 3,255

=> $4,242.50

Tax on Qualified Dividends= 480 { As computed in B Part}

Total Tax liability= 4,242.50+480

=> $4,722.50