Question

i need some explanation

TAXPAYERS WITH LARGE LONG-TERM CAPITAL GAIN AND/OR DIVIDEND INCOME WHO FALL INTO THE 37% BRACKET IN 2019 A single taxpayer with $575,000 of total taxable income in 2019 has $25,000 of ordinary income but $550,000 of long-term capital gain and qualified dividend income from a vast array of investments. The taxpayer's 2019 federal income tax liability is: 1. Tax on $25,000 ordinary income at single rates.................$2,806 2. Tax on $14,375 of LTCG/dividends at 0%........................... 0 3. Tax on $395,175 of LTCG/dividends at 15%... .............$59,276.25 4. Tax on $140,450 of LTCG/dividends at 20%... ................$28,090 Total 2019 Tax 90,172.25

Answer 1

Single filers
Income	LTCG Tax Rate
$0 to $39,375	0%
$39,376 to $434,550	15%
$434,551 or more	20%

Taxable Income	$      575,000
Ordinary Income	$         25,000
Tax on Ordinary Income	$           2,806
970+(25000-9700)*12%

Income	Rate	Tax
Tax on Ordinary Income		$   2,806.00
$                              14,375	0%	$               -
$                          395,175	15%	$ 59,276.25
$                            140,450	20%	$ 28,090.00
		$ 90,172.25
Income	Rate	Tax
Tax on Ordinary Income		$   2,806.00
39375-25000	0%	$               -
434550-39375	15%	$ 59,276.25
550000-14375-395175	20%	$ 28,090.00
		$ 90,172.25