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 $82,000 in salary. She received $12,000 of dividend income. She received $5,000 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 $9,000. She received $10,000 from the sale of Google stock that was purchased 6 months prior to the sale at a cost of $7,500. Mary only has allowable itemized deductions of $7,500, 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 the tax tables presented in the chapter. What is Mary’s federal tax liability? What is her marginal tax rate? What is her average tax rate?
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 $82,000 in salary. She received $12,000 of dividend income. She received $5,000 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 $9,000. She received $10,000 from the sale of Google stock that was purchased 6 months prior to the sale at a cost of $7,500. Mary only has allowable itemized deductions of $7,500, 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 the tax tables presented in the chapter. What is Mary’s federal tax liability? What is her marginal tax rate? What is her average tax rate?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
PERSONAL TAXES
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 $82,000 in salary.
She received $12,000 of dividend income.
She received $5,000 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 $9,000.
She received $10,000 from the sale of Google stock that was purchased 6 months prior to the sale at a cost of $7,500.
Mary only has allowable itemized deductions of $7,500, 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 the tax tables presented in the chapter.
What is Mary’s federal tax liability?
What is her marginal tax rate?
What is her average tax rate?
Transcribed Image Text:Table 3.5.
2020 Individual Tax
Rates
Single Individuals
You Pay This
Plus This Percentage
Average Tax
Rate at Top
of Bracket
If Your Taxable
Amount on the
on the Excess over
Income Is
Base of the Bracket
the Base (Marginal Rate)
Up to $9,875
$ 0.00
10.0%
10.0%
$9,875-$40,125
987.50
12.0
11.5
$40,125-$85,525
4,617.50
22.0
17.1
$85,525-$163,300
14,605.50
24.0
20.4
$163,300-$207,350
33,271.50
32.0
22.8
$207,350-$518,400
47,367.50
35.0
30.1
Over $518,400
156,235.00
37.0
37.0
Married Couples Filing Jolnt Returns
You Pay This
Plus This Percentage
on the Excess over the
Average Tax
If Your Taxable
Amount on the
Rate at
Income Is
Base of the Bracket
Base (Marginal Rate)
Top of Bracket
Up to $19,750
$ 0.00
10.0%
10.0%
$19,750-$80,250
1,975.00
120
11.5
$80,250-$171,050
9,235.00
220
17.1
$171,050-$326,600
29,211.00
24.0
20.4
$326,600-$414,700
66,543.00
32.0
22.8
$414,700-$622,050
94,735.00
35.0
26.9
Over $622,050
167,307.50
37.0
37.0
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