Question

Mr. and Mrs. Daniels, ages 45, and 42, had the following income items in 2019:

Salaries and wages	$	122,500
Interest income		6,300
Dividends eligible for 15% rate		4,000
Capital gain eligible for 15% rate		1,900

Mr. and Mrs. Daniels have no dependents and claim the standard deduction. Compute their income tax liability on a joint return.
           
            A)    $15,570  
            B)    $16,868
            C)    $22,348
            D)    None of the above.

Answer 1

Particulars	Amount
Salary	$             122,500
Interest income	$                  6,300
Dividends	$            4,000.00
Capital gains	$                  1,900
Less: standard deduction	$              (24,400)
Taxable income	$             110,300
Particulars	Amount
Taxable income	$       110,300.00
Less: capital gains	$                (1,900)
Less: dividends	$                (4,000)
Remaining income	$             104,400
Particulars	Amount
Tax on capital gains	$                     285
Tax on dividends	$                     600
Tax on remaining income $9,086 + ($104,400-$78,950) X22%]	$               14,685
	$               15,570

Total tax is $15,570.

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