Question

Determine the amount of tax liability in the following situations. In all cases, the taxpayer is using the filing status of married filing jointly. (Use the Tax Tables for taxpayers with taxable income under $100,000 and the Tax Rate Schedules for those with taxable income above $100,000. Round your intermediate computations to 2 decimal places and final answer to the nearest whole dollar amount.)

What is the tax liability for the following?

a.) Taxable income of $62,449 that includes qualified dividend income of $560.

b.) Taxable income of $12,932 that includes qualified dividend income of $322.

c.) Taxable income of $144,290 that includes qualified dividend income of $4,384.

d.) Taxable income of $43,297 that includes qualified dividend income of $971.

e.) Taxable income of $262,403 that includes qualified dividend income of $12,396.

Answer 1

Answer:

a. $8,361

b. $1,2610

c. 26,564

d. 5,427

e. 59,883

Explanation:

a.

Taxable Income = $62,449 - $560

= $61,889

Finding the tax liability in tables:

Tax on 61,889

= [1,845 +(61,889 - 18,450) × 15%]

= 1,845 + 6,516

= 8,361

Subtracting or Deducting the tax on the dividend income

= $560 × 0%

= 0

Therefore, the tax liability is $8,361

b.

Taxable Income = $12,932 - $322

= $12,610

Tax liability is $1,2610

c.

Taxable income = $144,290 - $4,384

= $139,906

Tax will be:

= 1,845 (74,900 - 18,450) × 15% + (139,906 - 74,900) × 25%

= 1,845 + 8,467.5 + 16,251.5

= $26,564

d.

Taxable income = $43,297 - $971

= $42,326

Tax liability will be:

= [1,845 + (42,326 - 18,450) × 15%

= 1,845 + 3,581.4

= 5,427

e.

Taxable income = $262,403 - $12,396

= $250,007

Tax on the qualified income will be:

= $12,396 × 15%

= $1,859.4

Tax liability will be:

= 1,845 {74,900 - 18,450) × 15% + (151,200 - 74,900) × 25% + (230,450 - 151,200) × 28% + (250,007 - 230,450) × 33%

= 1,845 + 8,460 + 19,075 + 22,190 + 6,453.81

= $58,024

Total tax liability will be:

= $58,024 + $1,860

= $59,883

Note: The values are taken from the tax liability table.