Question

Lacy is a single taxpayer. In 2019, her taxable income is $42,100. 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. Can you please show me step by step?

a. Tax Liability

b. Her $42,100 of taxable income includes $3,600 of qualified dividends.

c. Her $42,100 of taxable income includes $6,300 of qualified dividends.

Answer 1

a.)	Taxable Income	42,100
	Tax on Ordinary Income	5,120.50	{ 970 + ( 39,475 - 9,700 ) x 12% + ( 42,100 - 39,475 ) x 22%}
b.)		Amount $
	Taxable Income	42,100
	Less: Qualified Dividend	3,600
	Income taxable at ordinary rates	38,500
	Tax on Ordinary Income	4,426.00	{ 970 + ( 38,500 - 9,700 ) x 12% }
	Tax on Qualified Dividend	408.75	(42,100 - 39,375 ) x 15%
	Total Tax liability	4,834.75	( 4,426 + 408.75)
c.)		Amount $
	Taxable Income	42,100
	Less: Qualified Dividend	6,300
	Income taxable at ordinary rates	35,800
	Tax on Ordinary Income	4,102.00	{ 970 + ( 35,800 - 9,700 ) x 12% }
	Tax on Qualified Dividend	408.75	(39,375 - 35,800 ) x 0 % + { 6,300 - (39,375 - 35,800) } x 15%
	Total Tax liability	4,510.75	(4,102 + 408.75 )