Question

2017 Income Tax Brackets Single Taxable Income Tax Rate $0 - $9,325 10% $9,326 - $37,950...

2017 Income Tax Brackets

Single

Taxable Income

Tax Rate

$0 - $9,325

10%

$9,326 - $37,950

$932.50 plus 15% of the amount over $9,325

$37,951 - $91,900

$5,226.25 plus 25% of the amount over $37,950

$91,901 - $191,650

$18,713.75 plus 28% of the amount over $91,900

$191,651 - $416,700

$46,643.75 plus 33% of the amount over $191,650

$416,701 - $418,400

$120,910.25 plus 35% of the amount over $416,700

$418,401 or more

$121,505.25 plus 39.6% of the amount over $418,400

Married Filing Jointly or Qualifying Widow(er)

Taxable Income

Tax Rate

$0 - $18,650

10%

$18,651 - $75,900

$1,865 plus 15% of the amount over $18,650

$75,901 - $153,100

$10,452.50 plus 25% of the amount over $75,900

$153,101 - $233,350

$29,752.50 plus 28% of the amount over $153,100

$233,351 - $416,700

$52,222.50 plus 33% of the amount over $233,350

$416,701 - $470,700

$112,728 plus 35% of the amount over $416,700

$470,701 or more

$131,628 plus 39.6% of the amount over $470,700

2017 Personal Exemption Amounts

For tax year 2017, the personal exemption amount is $4,050

2017 Standard Deduction Amounts

Filing Status

Standard Deduction

Single

$6,350

Married Filing Jointly

$12,700

Married Filing Separately

$6,350

Head of Household

$9,350

Qualifying Widow(er)

$12,700

* As of 2017 the income tax rate for dividends and long term capital gain were

      0 % for income in the 10% and 15% bracket

     15% for income higher 15% but lower than 39.6% bracket.

     20% for income in the 39.6% bracket

For 2017, the FICA tax rate were

* 7.65% on the first $127,200 wages paid with the employer marching 7.65%.

* 1.45% on on any income from wages excess of $127,200 wages paid with the employer marching 1.45%.

* FICA tax does not apply to dividend income and capital gain if the Adjusted

    Gross Income is not above $200,000

15) Andy earned $45,000 in wages. Jack earned $45,000 in short term capital gain. Jolie earned $45,000 in long term capital gain. Calculate their FICA taxes, Fed income taxes, Fed total taxes. Compare their overall tax rates. Assume they are single and take standard deduction.

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Answer #1

Andy:

FICA tax = 45000 * 7.65% = 3442.50

Fed income tax =

Particulars Amount Amount
Gross income:
Salary $          45,000
Interest $                   -  
Other income $                   -  
Gross income $          45,000
For AGI deductions $            6,000
Adjusted gross income $          39,000
Less:
Standard deduction $            6,350
Personal exemption $            4,050
Total deductions $          10,400
Taxable income $          28,600
Income tax liability $       3,823.75
[ 932.5 + ( 28600 - 9325 ) × 0.15 ]

Total tax= 7266.25

Average tax rate = 16.15%

Jack:

No FICA tax

Fed tax = 3823.75

Average tax rate = 8.5%

Jolie:

No FICA tax

Fed tax is 0 on LTCG.

Average tax rate is 0%

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