Explanation Given: Pierre earned= $120,000 in wages and Katarina earned= $120,000 in dividend and long-term capital gain. Formula Used: p a r t a m o u n t = w h o l e a m o u n t 100 × % . Calculations: Pierre earned $120000 in wages. The income tax gets by subtracting her personal exemption $3900 and standard deduction $6100, so taxable income is $120000-$3900-$6100=$110000. From Table 9.4, 2013the income tax is ( 10 % × $ 8925 ) + ( 15 % × ( $ 36250 − $ 8925 ) ) + ( 25 % × ( $ 87850 − $ 36250 ) ) + ( 28 % × ( $ 110000 − $ 87850 ) ) = $ 892.5 + $ 4098.75 + $ 12900 + $ 6202 = $ 24093.25 The FICA tax rate is 7.65% on first $113700 and 1.45% on income excess of $94200. So, FICA tax of $120000 is ( 7.65 % × 113700 ) + ( 1.45 % × ( 120000 − 113700 ) ) = $ 8698.05 + $ 91.35 = $ 8789.4 . Total tax = FICA tax+ income tax =$8789.4+$24093.25 =$32882.65. The overall tax = t o t a l t a x g r o s s i n c o m e = $ 32882...

Using and Understanding Mathematics: A Quantitative Reasoning Approach (6th Edition)

6th Edition

ISBN: 9780321914620

Author: Jeffrey O. Bennett, William L. Briggs

Publisher: PEARSON

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Chapter 4.E, Problem 53E

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The simplify problem for dividends and capital gain.

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Chapter 4.E, Problem 52E

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Using and Understanding Mathematics: A Quantitative Reasoning Approach (6th Edition)

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