Question

Matt and Meg Comer are married and file a joint tax return. They do not have any children. Matt works as a history professor at a local university and earns a salary of $68,000. Meg works part time at the same university. She earns $33,000 a year. The couple does not itemize deductions. Other than salary, the Comers’ only other source of income is from the disposition of various capital assets (mostly stocks). (Use the tax rate schedules, Dividends and Capital Gains Tax Rates.) (Round your final answers to the nearest whole dollar amount.) b. What is the Comers’ tax liability for 2020 if they report the following capital gains and losses for the year? Short-term capital gains $ 1,500 Short-term capital losses 0 Long-term capital gains 13,000 Long-term capital losses (10,000 )

Answer 1

Answer:

$9,379

Explanation:

using the 2020 tax brackets:

the Comer's gross income = $68,000 + $33,000 + $1,500 = $102,500

taxable income = $102,500 - $24,800 (standard deduction for married couples) = $77,700

taxes owed = $1,975 + [12% x ($77,700 - $19,750)] = $8,929

capital gains = $13,000 - $10,000 = $3,000 x 15% capital gains tax rate = $450

total tax liability = $8,929 + $450 = $9,379

Answer 2

b. The  Comers’ tax liability for 2020 is $9,034

• The calculation is as follows:

Matt Income           68,000  

Add: Meg Income           33,000  

Add: Short term Capital gain             1,500  

Add: Net long term Capital gain             3,000 913,000-10,000)

Adjusted gross income       105,500  

Less: Standard deduction          -24,800  

Taxable Income           80,700  

Normal Taxable Income           77,700 (80700-3000)

Tax on Normal Income             8,929 ((1975+(77700-19750)×12%)

Add: Tax on Long term capital gain 105 ((3000-2,300)×15%)

Total Tax liability $ 9,034

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