Lacy is a single taxpayer. In 2017, her taxable income is $41,600. What is her tax...

Lacy is a single taxpayer. In 2017, her taxable income is $41,600. What is her tax liability in each of the following alternative situations? a. All of her income is salary from her employer. b. Her $41,600 of taxable income includes $3,500 of qualified dividends. c.Her $41,600 of taxable income includes $14,600 of qualified dividends.

Expert Solution

a)
Tax liability =	$5226.25 + (41600 - 37950)*25% = 6138.75

b)
tax at ordinary rate=	$5226.25 + (41600 - 37950 - 3500)*25% = 5263.75
tax at preferrential rate=	3500*15% = $525
Total tax liability = 5788.75


c)
tax at ordinary rate=	932.50 + (41600 - 14600 - 9325)*15% = 3583.75
tax at preferrential rate=	(37950-27000) * 0% + (14600 -(37950 - 27000)*15% = $547.50
Total tax liability = 4131.25

Note , the tax rates ;

Single

Taxable Income	Tax Rate
$0 - $9,325	10%
$9,326 - $37,950	$932.50 plus 15% of the amount over $9,325
$37,951 - $91,900	$5,226.25 plus 25% of the amount over $37,950
$91,901 - $191,650	$18,713.75 plus 28% of the amount over $91,900
$191,651 - $416,700	$46,643.75 plus 33% of the amount over $191,650
$416,701 - $418,400	$120,910.25 plus 35% of the amount over $416,700
$418,401 or more	$121,505.25 plus 39.6% of the amount over $418,400

ekkarill92 answered 2 years ago

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