Answer :
To determine how much Gita must pay in taxes on her investment income, we need to look at her nonqualified dividends and her short-term capital gains. Both of these are taxed at ordinary income rates.
Given:
- Wages: [tex]$50,000 - Nonqualified dividends: $[/tex]750
- Short-term capital gains: [tex]$2,500 - Combined nonqualified dividends and short-term capital gains: $[/tex]3,250
The tax brackets for single taxpayers are:
- 10% for income from [tex]$0 to $[/tex]9,525
- 12% for income from [tex]$9,526 to $[/tex]38,700
- 22% for income from [tex]$38,701 to $[/tex]82,500
Since investment income is taxed at ordinary income rates, we need to calculate the tax on [tex]$3,250. Here's the step-by-step breakdown of Gita's investment income tax: 1. The initial tax for the first portion of the income within the tax brackets. 2. Adding up the taxes from each portion according to the tax brackets. Thus, Gita must pay $[/tex]\[tex]$[/tex] 325.0 in taxes on her investment income.
Given:
- Wages: [tex]$50,000 - Nonqualified dividends: $[/tex]750
- Short-term capital gains: [tex]$2,500 - Combined nonqualified dividends and short-term capital gains: $[/tex]3,250
The tax brackets for single taxpayers are:
- 10% for income from [tex]$0 to $[/tex]9,525
- 12% for income from [tex]$9,526 to $[/tex]38,700
- 22% for income from [tex]$38,701 to $[/tex]82,500
Since investment income is taxed at ordinary income rates, we need to calculate the tax on [tex]$3,250. Here's the step-by-step breakdown of Gita's investment income tax: 1. The initial tax for the first portion of the income within the tax brackets. 2. Adding up the taxes from each portion according to the tax brackets. Thus, Gita must pay $[/tex]\[tex]$[/tex] 325.0 in taxes on her investment income.