Graham, a single, calendar year individual, had a rather good year in 2019. He generated business income of $220,000 and had $79,000 of business deductions, including deductible meals of $4,250 (before the required 50% reduction). Conservative Graham had taxable interest income of $18,600 and no other taxable income.

Grahams self-employment tax for 2019 is $20,222. Graham can deduct one-half of this in arriving at his adjusted gross income.

Grahams deductions and related information are as follows:

QBI deduction in arriving at AGI $26,603

Standard deduction 18,350

Itemized deductions 17,700

Dependents (Grahams mother, ager 75) 1

Create an Excel spreadsheet to:

Calculate Grahams taxable income and his gross federal income tax.

Based on your answers, calculate Grahams:

Average tax rate?

Effective tax rate?

Marginal tax rate?

Basic Tax Formula:

Income as most broadly conceived

Minus: Exclusions

Equals: Gross income

Minus: Deductions for AGI

Equals: Adjusted gross income

Minus: Larger of itemized deductions or standard deduction

Minus: QBI deduction

Equals: Taxable income

Apply tax rates

Equals gross income tax

Minus: Credits and prepayments

Equals: Tax due or refund.

of the amount over- $ 0 Head of household-Schedule Z If taxable income is: But not Over- over The tax is: $ 0 $ 13,850 ......... 10% 13,850 52,850 $ 1,385.00 + 12% 52,850 84,200 6,065.00 + 22% 84,200 160,700 12,962.00 + 24% 160,700 204,100 31,322.00 + 32% 204,100 45,210.00 + 35% 510,300 152,380.00 + 37% Married filing separatelySchedule Y-2 13,850 52,850 84,200 160,700 204,100 510,300 Single-Schedule X If taxable of the income is: But not amount Over- over- The tax is: over- $ 0 $ 9,700 .........10% $ 0 9,700 39,475 $ 970.00 + 12% 9,700 39,475 84,200 4,543.00 + 22% 39,475 84,200 160,725 14,382.50 + 24% 84,200 160,725 204,100 32,748.50 + 32% 160,725 204,100 510,300 46,628.50 + 35% 204,100 510,300 153,798.50 + 37% 510,300 Married filing jointly or Qualifying widow(er), Schedule Y-1 If taxable of the income is: But not amount Over- over- The tax is: over- S 0 $ 19,400 .........10% $ 0 19,400 78,950 $ 1,940.00 + 12% 19,400 78,950 168,400 9,086.00 + 22% 78,950 168,400 321,450 28,765.00 + 24% 168,400 321,450 408,200 65,497.00 + 32% 321,450 408,200 612,350 93,257.00 + 35% 408,200 612,350 164,709.50 + 37% 612,350 510,300 of the amount over- $ If taxable income is: Over- 0 9,700 39,475 84,200 160,725 204,100 306,175 But not over- $ 9,700 39,475 84,200 160,725 204,100 306,175 The tax is: ......... 10% $ 970.00 + 12% 4,543.00 + 22% 14,382.50 + 24% 32,748.50 + 32% 46,628.50 + 35% 82,354.75 + 37% $ 9,700 39,475 84,200 160,725 204,100 306,175 of the amount over- $ 0 Head of household-Schedule Z If taxable income is: But not Over- over The tax is: $ 0 $ 13,850 ......... 10% 13,850 52,850 $ 1,385.00 + 12% 52,850 84,200 6,065.00 + 22% 84,200 160,700 12,962.00 + 24% 160,700 204,100 31,322.00 + 32% 204,100 45,210.00 + 35% 510,300 152,380.00 + 37% Married filing separatelySchedule Y-2 13,850 52,850 84,200 160,700 204,100 510,300 Single-Schedule X If taxable of the income is: But not amount Over- over- The tax is: over- $ 0 $ 9,700 .........10% $ 0 9,700 39,475 $ 970.00 + 12% 9,700 39,475 84,200 4,543.00 + 22% 39,475 84,200 160,725 14,382.50 + 24% 84,200 160,725 204,100 32,748.50 + 32% 160,725 204,100 510,300 46,628.50 + 35% 204,100 510,300 153,798.50 + 37% 510,300 Married filing jointly or Qualifying widow(er), Schedule Y-1 If taxable of the income is: But not amount Over- over- The tax is: over- S 0 $ 19,400 .........10% $ 0 19,400 78,950 $ 1,940.00 + 12% 19,400 78,950 168,400 9,086.00 + 22% 78,950 168,400 321,450 28,765.00 + 24% 168,400 321,450 408,200 65,497.00 + 32% 321,450 408,200 612,350 93,257.00 + 35% 408,200 612,350 164,709.50 + 37% 612,350 510,300 of the amount over- $ If taxable income is: Over- 0 9,700 39,475 84,200 160,725 204,100 306,175 But not over- $ 9,700 39,475 84,200 160,725 204,100 306,175 The tax is: ......... 10% $ 970.00 + 12% 4,543.00 + 22% 14,382.50 + 24% 32,748.50 + 32% 46,628.50 + 35% 82,354.75 + 37% $ 9,700 39,475 84,200 160,725 204,100 306,175