Question

Glenn, head of household with three dependents, has 2018 wages of $31,000, paid alimony of $5,000, has taxable interest income of $3,500, and a $14,000 0%/15% net long-term capital gain. Glenn uses the standard deduction and is age 38. What is his 2018 taxable income and the tax on the taxable income? How much did he save through having a NLTCG?

Answer 1

Computation of Taxable Income
Wages	$31,000
Interest income	$3,500
Long term capital gain	$14,000
Less: Alimony paid	($5,000)
Adjusted gross income	$43,500
Less: Standard deduction	$18,000
Taxable income	$25,500
Tax on Long term capital gain	$0
Tax on ordinary income (25500-14000) @ 10%	$1,150
She saved $ 1638 through having NLTCG
Tax on ordinary income
on first 13600 @ 10%	1360
on remaining 11900 (25500-13600) x 12%	1428
Total tax	2788
Less: tax she actually own	1150
Tax saved	1638