Mary Jarvis is a single individual who is working on filing her tax return for the...

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Mary Jarvis is a single individual who is working on filing hertax return for the previous year. She has assembled the followingrelevant information:
She received $128,000 in salary.
She received $16,000 of dividend income.
She received $8,800 of interest income on Home Depot bonds.
She received $22,500 from the sale of Disney stock that waspurchased 2 years prior to the sale at a cost of $5,600.
She received $9,000 from the sale of Google stock that waspurchased 6 months prior to the sale at a cost of $6,200.
Mary receives one exemption ($4,000), and she has allowableitemized deductions of $7,500. These amounts will be deducted fromher gross income to determine her taxable income.
Assume that her tax rates are based on Table 3.5. The data hasbeen collected in the Microsoft Excel Online file below. Open thespreadsheet and perform the required analysis to answer thequestions below.
Open spreadsheet
What is Mary's federal tax liability? Round your answer to thenearest cent. Do not round intermediate calculations.
$
What is her marginal tax rate? Round your answer to 1 decimalplace.
%
What is her average tax rate? Round your answer to 2 decimalplaces.
%

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4.2 Ratings (675 Votes)

1	Mary's federal tax liability
	Salary Income	$128,000
	Dividend income	$16,000
	Interest income	$8,800
	Long term capital gain (22500-5600)	$16,900
	Short tem capital gain (9000-6200)	$2,800
	Gross Income	$172,500
	Less: Exemption	$4,000
	Itemized deductions	$7,500
	Taxable Income	$161,000
	Tax on Dividend income @ 15%	$2,400
	Tax on long term capital gain @ 15%	$2,535
	Tax on remaining income of $128,100
	Tax on first $9525 @ 10%	$952.50
	Tax on next $29,174 @12%	$3,500.88
	Tax on next $43,799 @22%	$9,635.78
	Tax on next $45,599 @24% (128100-82501)	$10,943.76
	Total Federal tax liability	$29,967.92

2	Marginal Tax rate
	10% on income from 0-$9525	$952.50
	12% on income from $9526-$38700	$3,500.88
	22% on income from $38701-$82500	$9,635.78
	24% on income from $82501-$128100	$10,943.76
	Total tax	$25,032.92
	Total income	$128,100
	Marginal Tax rate	24%

3	Average tax rate
	Total tax liability	$29,967.92
	Total taxable income	$161,000
	Average tax rate	18.61%

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Transcribed Image Text

Mary Jarvis is a single individual who is working on filing hertax return for the previous year. She has assembled the followingrelevant information:She received $128,000 in salary.She received $16,000 of dividend income.She received $8,800 of interest income on Home Depot bonds.She received $22,500 from the sale of Disney stock that waspurchased 2 years prior to the sale at a cost of $5,600.She received $9,000 from the sale of Google stock that waspurchased 6 months prior to the sale at a cost of $6,200.Mary receives one exemption ($4,000), and she has allowableitemized deductions of $7,500. These amounts will be deducted fromher gross income to determine her taxable income.Assume that her tax rates are based on Table 3.5. The data hasbeen collected in the Microsoft Excel Online file below. Open thespreadsheet and perform the required analysis to answer thequestions below.Open spreadsheetWhat is Mary's federal tax liability? Round your answer to thenearest cent. Do not round intermediate calculations.$What is her marginal tax rate? Round your answer to 1 decimalplace.%What is her average tax rate? Round your answer to 2 decimalplaces.%