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 $110,000 in salary. • She received $13,000 of dividend income. She received $3,900 of interest income on Home Depot bonds. She received $22,000 from the sale of Disney stock that was purchased 2 years prior to the sale at a cost of $8,000. She received $9,000 from the sale of Google stock that was purchased 6 months prior to the sale at a cost of $5,700. • Mary only has allowable itemized deductions of $5,700, so she will take the standard deduction of $12,400. The standard deduction is subtracted from gross income to determine her taxable income. Assume that her tax rates are based on Table 3.5. ● . . a. What is Mary's federal tax liability? Enter your answer as a positive value. Do not round intermediate calculations. Round your answer to the nearest cen $ b. What is her marginal tax rate? Do not round intermediate calculations. Round your answer to one decimal place. % c. What is her average tax rate? Do not round intermediate calculations. Round your answer to two decimal places. %
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 $110,000 in salary. • She received $13,000 of dividend income. She received $3,900 of interest income on Home Depot bonds. She received $22,000 from the sale of Disney stock that was purchased 2 years prior to the sale at a cost of $8,000. She received $9,000 from the sale of Google stock that was purchased 6 months prior to the sale at a cost of $5,700. • Mary only has allowable itemized deductions of $5,700, so she will take the standard deduction of $12,400. The standard deduction is subtracted from gross income to determine her taxable income. Assume that her tax rates are based on Table 3.5. ● . . a. What is Mary's federal tax liability? Enter your answer as a positive value. Do not round intermediate calculations. Round your answer to the nearest cen $ b. What is her marginal tax rate? Do not round intermediate calculations. Round your answer to one decimal place. % c. What is her average tax rate? Do not round intermediate calculations. Round your answer to two decimal places. %
Chapter4: Income Exclusions
Section: Chapter Questions
Problem 70IIP: In each of the following problems, identify the tax issue(s) posed by the facts presented. Determine...
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Transcribed Image Text: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 $110,000 in salary.
She received $13,000 of dividend income.
She received $3,900 of interest income on Home Depot bonds.
She received $22,000 from the sale of Disney stock that was purchased 2 years prior to the sale at a cost of $8,000.
She received $9,000 from the sale of Google stock that was purchased 6 months prior to the sale at a cost of $5,700.
Mary only has allowable itemized deductions of $5,700, so she will take the standard deduction of $12,400. The standard deduction is subtracted from her
gross income to determine her taxable income.
Assume that her tax rates are based on Table 3.5.
●
a. What is Mary's federal tax liability? Enter your answer as a positive value. Do not round intermediate calculations. Round your answer to the nearest cent.
b. What is her marginal tax rate? Do not round intermediate calculations. Round your answer to one decimal place.
%
c. What is her average tax rate? Do not round intermediate calculations. Round your answer to two decimal places.
%
Transcribed Image Text:Single Individuals
If Your Taxable
Income Is
Up to $9,875
$9,875-$40,125
$40,125-$85,525
$85,525-$163,300
$163,300-$207,350
$207,350-$518,400
Over $518,400
If Your Taxable
Income Is
Married couples Filing Joint Returns
Up to $19,750
$19,750-$80,250
$80,250-$171,050
You Pay This
Amount on the
Base of the Bracket
$
$171,050-$326,600
$326,600-$414,700
$414,700-$622,050
Over $622,050
0.00
987.50
4,617.50
14,605.50
33,271.50
47,367.50
156,235.00
You Pay This
Amount on the
Base of the Bracket
$ 0.00
1,975.00
9,235.00
29,211.00
66,543.00
94,735.00
167,307.50
Plus This Percentage
on the Excess over
the Base (Marginal Rate)
10.0%
12.0
22.0
24.0
32.0
35.0
37.0
Plus This Percentage
on the Excess over the
Base (Marginal Rate)
10.0%
12.0
22.0
24.0
32.0
35.0
37.0
Average Tax
Rate at Top
of Bracket
10.0%
11.5
17.1
20.4
22.8
30.1
37.0
Average Tax
Rate at
Top of Bracket
10.0%
11.5
17.1
20.4
22.8
26.9
37.0
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