Use the following table for this problem. Tax Rate Schedule 2021 Unmarried Individual: If Taxable Income Is:
Question:
Use the following table for this problem.
Tax Rate Schedule 2021 | |
Unmarried Individual: | |
If Taxable Income Is: | The Tax Is: |
Not over $9,950 | 10% of the taxable income |
Over $9,950 but not over $40,525 | $995 plus 12% of the excess over $9,950 |
Over $40,525 but not over $86,375 | $4,664 plus 22% of the excess over $40,525 |
Over $86,375 but not over $164,925 | $14,751 plus 24% of the excess over $86,375 |
Over $164,925 but not over $209,425 | $33,603 plus 32% of the excess over $164,925 |
Over $209,425 but not over $523,600 | $47,843 plus 35% of the excess over $209,425 |
Over $523,600 | $157,804 plus 37% of the excess over $523,600 |
Married Filing Jointly or Qualifying Widow(er): | |
If Taxable Income Is: | The Tax Is: |
Not over $19,900 | 10% of taxable income |
Over $19,900 but not over $81,050 | $1,990, plus 12% of the excess over $19,900 |
Over $81,050 but not over $172,750 | $9,328, plus 22% of the excess over $81,050 |
Over $172,750 but not over $329,850 | $29,502, plus 24% of the excess over $172,750 |
Over $329,850 but not over $418,850 | $67,206, plus 32% of the excess over $329,850 |
Over $418,850 but not over $628,300 | $95,686, plus 35% of the excess over $418,850 |
Over $628,300 | $168,993, plus 37% of the excess over $628,300 |
Standard Deduction | |
Single - $12,550 | |
MFJ - $25,100 | |
Additions for age and the blind | |
Single - $1,750 | |
MFJ - $1,400 | |
Exemption Amount - $0 | |
Individuals taxed at: | |
Rate Single Taxable income MFJ Taxable Income | |
0% Up to $40,400 Up to $80,800 | |
15% > $40,400 but < $445,850 > $80,001 but < $501,600 | |
20% Over $445,850 Over $501,600 |
Tim and Jan, file MFJ and are under 65 years old with good vision. They have income and deductions for 2021 that are summarized as follows:
Municipal Bond Interest $9,000
Federal Bond Interest $8,000
Tim Wages $98,000
Jan Wages $145,000
Received Qualified Dividends $5,000
Sold Stock A for $16,000 on 12/11/21. Purchased stock A for $12,750 on 3/1/19.
Sold Stock B for $7,500 on 11/10/21. Purchased stock B for $10,000 on 10/1/18.
Non-refundable income tax credit $1,500
Federal income tax withheld $38,000
Itemized Deductions $8,000
Other Deductions for A.G.I. $3,000
Required
1) What is B’s tax due or (refund) for 2021 tax year?
2) What is B’s Marginal tax rate?
3) What is B’s Effective tax rate?
In the text box provided, show the tax formula and calculate the appropriate rates.
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill