Question

2018 Individual Tax Rates
Single Individuals
If Your Taxable Income Is	You Pay This Amount on the Base of the Bracket	Plus This Percentage on the Excess over the Base (Marginal Rate)		Average Tax Rate at Top of Bracket
Up to $9,525	$0	10.0	%	10.0	%
$9,525 - $38,700	952.50	12.0		11.5
$38,700 - $82,500	4,453.50	22.0		17.1
$82,500 - $157,500	14,089.50	24.0		20.4
$157,500 - $200,000	32,089.50	32.0		22.8
$200,000 - $500,000	45,689.50	35.0		30.1
Over $500,000	150,689.50	37.0		37.0

Standard deduction for individual: $12,000

Married Couples Filing Joint Returns
If Your Taxable Income Is	You Pay This Amount on the Base of the Bracket	Plus This Percentage on the Excess over the Base (Marginal Rate)		Average Tax Rate at Top of Bracket
Up to $19,050	$0	10.0	%	10.0	%
$19,050 - $77,400	1,905.00	12.0		11.5
$77,400 - $165,000	8,907.00	22.0		17.1
$165,000 - $315,000	28,179.00	24.0		20.4
$315,000 - $400,000	64,179.00	32.0		22.8
$400,000 - $600,000	91,379.00	35.0		26.9
Over $600,000	161,379.00	37.0		37.0

Standard deduction for married couples filing jointly: $24,000

Quantitative Problem: Jenna is a single taxpayer. During 2018, she earned wages of $116,000. She doesn't itemize deductions, so she will take the standard deduction to calculate 2018 taxable income. In addition, during the year she sold common stock that she had owned for five years for a net profit of $7,400. How much does Jenna owe to the IRS for taxes? Do not round intermediate calculations. Round your answer to the nearest cent.

$  

Answer 1

Solution: Jenna is a single taxpayer.

Jenna owe to the IRS for taxes is $ 20,359.50

Notes:

1) Taxable income

Income	$             116,000
Long Term Capital Gain	$                  7,400
Annual Gross Income	$             123,400
Standard Deduction	$             (12,000)
Taxable Income	$             111,400

2) Total Tax

Particulars	Taxable Income	Calculation	Tax
Ordinary Income ($111,400 - $ 7,400)	$             104,000	14089.50 +(104000-82500)*24%	$ 19,249.50
Long Term Capital Gain	$                  7,400	7400*15%	$    1,110.00
Total Tax			$ 20,359.50