Question

Scenario 3

Status Single

Ages 50

Dependents (under 18) 0

W2 wages $85,000

1099-R 0

Schedule C profit $25,000

1120S - K-1 Income 0

1065 - K-1 Income 0

Itemized Deductions

Medical $0

Sales Tax or Income Tax $4,000

Property Tax $1,500

Charitable Contributions $2,000

Mortgage Interest $4,500

Other/Employee Expenses $800

Show work, please

Tax based on 2017

Marginal tax rate

Effective tax rate

Tax based on 2018

Marginal tax rate

Effective tax rate

Answer 1

W-2 Wages	85,000.00
Schedule C profit	25,000.00
Total Taxable Income		110,000.00
Itimized Deduction
Sales Tax or Income Tax	4,000.00
Property Tax	1,500.00
Charitable Contributions	2,000.00
Mortgage Interest	4,500.00
Total Itimized Deduction		12,000.00
Net Taxable Income		98,000.00

2017
Tax Base	Incremental Income	Tax Rate	Tax
9,325.00	9,325.00	10%	932.50
37,950.00	28,625.00	15%	4,293.75
91,900.00	63,275.00	25%	15,818.75
98,000.00	34,725.00	28%	9,723.00
			30,768.00

Income Tax for 2017

30,768.00

2018
Tax Base	Incremental Income	Tax Rate	Tax
9,525.00	9,525.00	10%	952.50
38,700.00	29,175.00	12%	3,501.00
82,500.00	53,325.00	22%	11,731.50
98,000.00	44,675.00	24%	10,722.00
			26,907.00

Income Tax for 2018

26,907.00

Effective Tax Rate 2017	30768/110000	27.97%
Effective Tax Rate 2018	26907/110000	24.46%