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Requirement a. Compute Latesha's taxable income and federal tax liability for 2020 (round to dollars and ignore the qualified business income deduction and self-employment taxes for this problem). First calculate the gross income, then calculate taxable income and the federal tax liability. (Calculate the tax using the tax rate schedule. Do not round interim tax calculations. Round the amount entered into the cell to the nearest whole dollar. If an input field is not used label or enter a zero.) Total income from whatever source derived Minus: Exclusions, as provided in the tax law Gross income Minus: Deductions for Adjusted gross income Adjusted gross income (AGI) Minus: Deductions from AGI: Taxable income TaxRequirement b. Compute Latesha's marginal, average, and effective tax rates. (Round your answers to two decimal places, XXX'Ka.) Latesha's marginal tax rate is '35. Latesha's average tax rate is '35. Latesha's effective tax rate is '35. Requirement c. For tax planning purposes, which of the three rates in Part b is the most important? From a tax planning point of View, the Y is the most important rate because i Data Table i Reference - X th INCOME: Salary $ 100,000 Single If taxable income is: The tax is: Business Income 25,000 Not over $9,875 10% of taxable income. Interest income from taxable bonds 10,000 . . . . . . $987.50 + 12% of the excess over $9,875. Tax-exempt bond interest 5,000 Over $9,875 but not over $40, 125 Over $40,125 but not over $85,525 . . . . . . $4,617.50 + 22% of the excess over $40, 125. TOTAL INCOME 69 140,000 fet Over $85,525 but not over $163,300 . . . . . $14,605.50 + 24% of the excess over $85,525. Over $163,300 but not over $207,350 . . ..$33,271.50 + 32% of the excess over $163,300. DEDUCTIONS: Business expenses 9,500 20,000 Over $207,350 but not over $518,400 . . . . $47,367.50 + 35% of the excess over $207,350. Itemized deductions Over $518,400 . . . . . $156,235.00 + 37% of the excess over $518,400. TOTAL DEDUCTIONS 29,500 Print Done i Reference STANDARD DEDUCTION Filing Status Married individuals filing joint returns and surviving spouses $ 24,800 Heads of households 18,650 Unmarried individuals (other than surviving spouses and heads of households) $ 12,400 Married individuals filing separate returns $ 12,400 Additional standard deduction for the aged and the blind; Individual who is married and surviving spouses $1,300* * Additional standard deduction for the aged and the blind; Individual who is unmarried and not a surviving spouse $1,650* * Taxpayer claimed as dependent on another taxpayer's return: Greater of (1) earned income plus $350 or (2) $1,100. These amounts are $2,600 and $3,300, respectively, for a taxpayer who is both aged and blind. Personal and Dependency Exemptions Suspended: In conjunction with the increased standard deduction amount, the Tax Cuts and Jobs Act reduces the personal exemption amount to $0 for tax years from 2018 through 2025, effectively suspending the exemptions for these years. Print Done
