Question

Mr. Rogers, an unmarried individual, had the following income items. Salary $ 512,600 Interest income 20,000 Dividend eligible for 20% rate 32,000 Mr. Rogers had $34,100 itemized deductions and four dependent children (ages 5 through 15). Compute his income tax (before credits). Assume the taxable year is 2019. Use Individual Tax Rate Schedules and Standard Deduction Table. (Round your intermediate calculations and final answers to the nearest whole dollar amount.).

Answer 1

Ans: Year =2019

Gross Income & AGI= Salary+ interest Income+Dividend

=> 512,600+20,000+32,000

=> 564,600

AGI = 564,600

Less: Greater of itemized or standard deduction $34,100 {note: Individual standard deduction is 12,200 for 2019}

Taxable income= 564,600-34,100

=> 530,500

Regular Income= {530,500-32,000}= 498,500

Income tax on regular income= 46,628.50+35% of {498,500-204,100}

=> 46,628.50+ 35% of 294,400

=> 46,628.50+103,040

=> $149,668.50

Income tax on dividends= 32,000*20%= 6,400

Income tax [before credits]= 149,668.50+6,400= 156,068.50