Mary Jarvis is a single individual who is working on filing her tax return for the previous year. She has assembled the following relevant information: She received $117,000 in salary. She received $14,000 of dividend income. She received $8,100 of interest income on Home Depot bonds. She received $25,000 from the sale of Disney stock that was purchased 2 years prior to the sale at a cost of $6,500. She received $8,000 from the sale of Google stock that was purchased 6 months prior to the sale at a cost of $6,300. Mary receives one exemption ($4,000), and she has allowable itemized deductions of $7,500. These amounts will be deducted from her gross income to determine her taxable income. Assume that her tax rates are based on Table 3.5. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the questions below. Open spreadsheet a. What is Mary's federal tax liability? Round your answer to the nearest cent. Do not round intermediate calculations. b. What is her marginal tax rate? Round your answer to 1 decimal place. 28 % c. What is her average tax rate? Round your answer to 2 decimal places. X % Salary ######### Tax Table for Single Individuals: Taxable Income Dividend Income Interest Income LT Stock Sale LT Stock Cost ST Stock Sale ST Stock Cost Personal Exemption Itemized Deductions Apllicable Tax Rate on Dividends & LT Capital Gains $14,000.00 $8,100.00 $25,000.00 $6,500.00 $8,000.00 $6,300.00 $4,000.00 $7,500.00 15.00% Percentage Amount Paid on Excess on Base over Base $0.00 $0.00 10.00% $9,225.00 $922.50 15.00% $37,450.00 $5,156.25 25.00% $90.750.00 $18,481.25 28.00% $189,750.00 $46,075.25 33.00% $411,500.00 $119,401.25 35.00% $413,200.00 $119.996.25 39.60% a. Calculation of Federal Tax Liability Calculation of Taxable income: Salary Interest Income ST Capital Gains Income before Exemption and Deductions Personal Exemption Itemized Deductions Taxable income before Dividends & LT Capital Gains Formulas #N/A #N/A #N/A #N/A #N/A #N/A #N/A Taxes on Taxable income Before Dividends & LT Capital Gains: Tax Liability on Base of Bracket Tax Liability on Excess over Base Tax on Taxable income before Dividends & LT Capital Gains #N/A #N/A #NIA Taxes on Dividends & LT Capital Gains: Dividend Income LT Capital Gains Income Total Dividend & LT Capital Gains Income Tax on Dividends & LT Capital Gains Income #N/A #N/A #N/A #N/A Total Federal Tax Liability #N/A Table 3.5 2015 Individual Tax Rates Single Individuals If Your Taxable Income Is Up to $9,225 $9,225-37,450 $37,450 $90,750 $90,750-$189,750 $189,750-S411,500 $411,500-$$413,200 Over $413,200 You Pay This Amount on the Base of the Bracket S 0 922.50 5,156.25 18,481.25 46,075.25 119,401.25 119,996.25 Plus This Percentage on the Excess over the Base ( Marginal Rate) 10.0% 15.0 25.0 28.0 33.0 35.0 39.6 Average Tax Rate at Top of Bracket 10.0% 13.8 20.4 24.3 29.0 29.0 39.6 0 Married couples Filing Joint Returns You Pay This If Your Taxable Amount on the Income Is Base of the Bracket Up to $18,450 S $18,450-$74,900 1,845.00 $74.900-5151,200 10,312.50 $151,200-$230,450 29,387.50 $230,450-$411,500 51,577.50 $411,500-$464,850 111,324.00 Over $464,850 129,996.50 Plus This Percentage on the Excess over the Base (Marginal Rate) 10.0% 15.0 25.0 28.0 33.0 35.0 39.6 Average Tax Rate at Top of Bracket 10.0% 13.8 19.4 22.4 27.1 28.0 39.6
