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Mary Jarvis is a single individual who is working on filing her tax return for the previous year. She has assembled the follo

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Table 3.5 2015 Individual Tax Rates Single Individuals TrYour Taxable Income Is Up to $9.225 59.225-537,450 $37,450-590.750 5

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Answer #1
a.) Calculation of taxable Income Amount in $
Salary        139,000
Add: Interest income             3,500
Add: Short Term Capital gain             4,400 (12,000 - 7,600 )
Income before exemption & deductions       146,900
Less: Personal Exemption             4,000
Less: Itemized deductions             7,500
Taxable Income before dividend & long term capital gain       135,400
Taxes on Taxable Income before dividend & long term capital gain
Tax liability on base of bracket     18,481.25
Tax liability on excess over base     12,502.00 =(135400-90750)*28%
Tax on Taxable Income before dividend & long term capital gain     30,983.25
Taxes on Dividend & long term capital gain
Dividend Income           14,000
Long term Capital gain           14,600 =21500-6900
Total Dividend & LT Capital gain           28,600
Tax on Dividend & long term capital gain       4,290.00 =28600*15%
Mary's Total Federal tax liability $ 35,273.25 =30983.25+4290
b.) Marginal Tax rate is 28.0% because every dollar increase in income upto $189,750 will attract 28% tax for Mary.
c.) Average tax rate 21.51% =35273.25/(135400+28600)
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