Question

Yuki’s income for last year was $54,000 all from salary as a librarian. Artie’s income was...

Yuki’s income for last year was $54,000 all from salary as a librarian. Artie’s income was $54,000 all from long term investment income and profits from stock sales. Despite their equal incomes Yuki paid nearly twice as much in federal taxes. Explain why this is so: provide a specific answer but do not calculate their taxes. (Note: Both people are single and took the standard deduction.)

Homework Answers

Answer #1

Yuki paid twice Federal taxes than Artie because he was having all of his income from the salary whereas Artie was mostly having long term investment income which will attract lower capital gain tax and she will also benefit from stock sales which are short term in nature and which are only taxable at normal rates.

The long term Investments income are always having a lower rate of taxation if they have been held for more than one year and they will attract a lower rate of capital gain tax so Artie has to pay lower taxes due to inclusion of higher amount of capital gain in her overall income and stock sales will be treated as normal rates so her overall tax are lower.

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Ellen , 45 and single has the following income and deductions in 2019. Salary                             &
Ellen , 45 and single has the following income and deductions in 2019. Salary                                                          $50,000 Interest Income                                                3,200 Dividends                                                           800 Medical Expenses                                            6,150 Property Taxes on Personal residence             6,300 Interest on Home Mortgage                             7,600 State and Local Income Taxes                         5,800 State and Local Sales Taxes                            2,000 Investment Interest Expense                           5,000 In addition, Ellen’s car (value =$15,000, cost $20,000) was stolen during the year and the insurance reimbursement was $7,000. She also had $2,000 of travel expenses related to her job...
a.) Asteria earned a $25,500 salary as an employee in 2018. How much should her employer...
a.) Asteria earned a $25,500 salary as an employee in 2018. How much should her employer have withheld from her paycheck for FICA taxes? (Rounded to the nearest whole dollar amount). b.) Brandon and Jane Forte file a joint tax return and decide to itemize their deductions. The Forte's income for the year consists of $120,000 in salary, $1,000 interest income, $1,500 nonqualifying dividends, and $1,100 long-term capital gains. The Forte's expenses for the year consist of $3,000 investment interest...
Joe earned $100,000 in salary and $6,000 in interest income during the year. Joe’s employer withheld...
Joe earned $100,000 in salary and $6,000 in interest income during the year. Joe’s employer withheld $11,000 of federal income taxes from Joe’s paychecks during the year. Joe has one qualifying dependent child who lives with him. Joe qualifies to file as head of household and has $23,000 in itemized deductions. You may use the IRS instructions to form 1040 (2019) for reference. a. Determine Joe’s tax refund or taxes due. You must show work. b. Copy and paste the...
Elizabeth was self-employed from January 1, 2020 through March 31, 2020. During that time, she earned...
Elizabeth was self-employed from January 1, 2020 through March 31, 2020. During that time, she earned $44,000 of profits from her business ($100,000 of business income less $56,000 of deductible business expenses). On April 1, 2020, Elizabeth took a job as a nuclear physicist and earned a salary of $178,000 between April 1 and December 31, 2020. If Elizabeth files her 2020 federal income tax return as a Single taxpayer, what is the total amount of FICA taxes she will...
Trudy's AGI last year was $200,000. Her Federal income tax came to $65,000, which she paid...
Trudy's AGI last year was $200,000. Her Federal income tax came to $65,000, which she paid through a combination of withholding and estimated payments. This year, her AGI will be $300,000, with a projected tax liability of $50,000, all to be paid through estimates. Note: Ignore the annualized income method. a. Trudy's total estimated tax payments are $______ under the current-year method and $__________ under the prior-year method. b. Assume instead that Trudy's AGI last year was $100,000 and resulted...
Determine Betty’s adjusted gross income for the year given the following information: Salary: $78,000 Child care...
Determine Betty’s adjusted gross income for the year given the following information: Salary: $78,000 Child care credit: $1,000 Personal and Dependency exemptions: $12,000 Investment interest: $4,000 IRA contribution: $5,500 Municipal bond interest: $500 Federal income taxes withheld: $6,000 Itemized deductions: $15,300 $82,500 $82,000 $76,500 $77,000 Please do not copy from Chegg otherwise I have to report the answer. Explain the answer throughly by showing each step of the calculation.
Determine Betty’s taxable income for the year given the following information: Salary: $78,000 Child care credit:...
Determine Betty’s taxable income for the year given the following information: Salary: $78,000 Child care credit: $1,000 Personal and Dependency exemptions: $12,000 Investment interest: $4,000 IRA contribution: $5,500 Municipal bond interest: $500 Federal income taxes withheld: $6,000 Itemized deductions: $15,300 $55,200 $54,700 $49,700 $49,200 Please do not copy from Chegg. Only attempt if you are sure about the answer. Solve in a step by step manner, explaining each step.
Whitney received $75,000 of taxable income in 2020. All of the income was salary from her...
Whitney received $75,000 of taxable income in 2020. All of the income was salary from her employer. What is her income tax liability in each of the following alternative situations? Use Tax Rate Schedule for reference. (Do not round intermediate calculations.) a. She files under the single filing status. b. She files a joint tax return with her spouse. Together their taxable income is $75,000. c. She is married but files a separate tax return. Her taxable income is $75,000....
1. A taxpayer wishes to take a deduction for a worthless debt. Without proper documentation, the...
1. A taxpayer wishes to take a deduction for a worthless debt. Without proper documentation, the taxpayer faces the risk that the IRS will assert that A. the debt became worthless in an earlier period, and the statute of limitations prevents the taxpayer from amending that earlier return. B. the debt is not yet worthless, disallowing the deduction C. both of the above. D. none of the above. 2. During the current year, Deborah Baronne, a single individual, paid the...
Residual Income [LO10-1, LO10-2] Financial data for Joel de Paris, Inc., for last year follow: Joel...
Residual Income [LO10-1, LO10-2] Financial data for Joel de Paris, Inc., for last year follow: Joel de Paris, Inc. Balance Sheet Beginning Balance Ending Balance Assets Cash $ 136,000 $ 126,000 Accounts receivable 335,000 486,000 Inventory 561,000 479,000 Plant and equipment, net 838,000 819,000 Investment in Buisson, S.A. 398,000 433,000 Land (undeveloped) 247,000 250,000 Total assets $ 2,515,000 $ 2,593,000 Liabilities and Stockholders' Equity Accounts payable $ 375,000 $ 330,000 Long-term debt 1,007,000 1,007,000 Stockholders' equity 1,133,000 1,256,000 Total liabilities...