6. A farm family filed their income tax return with the following totals Net far

Question

6. A farm family filed their income tax return with the following totals Net farm profit (Schedule F) Capital gains (Schedule D) Other taxable income (off-farm rent) $82,000 $10,000 $8,000 $100,000 $20,000 Personal deduction and exemptions Assume the tax rates this year are as follows: Self-employment tax Capital gains tax Rate 15.3% 15% Bracket up to $120,000 no limit Ordinary income tax (federal)- $0 to $15,000 $15,000 to $50,000 over $50,000 ( 10% 15% How much did they owe for each of the following types of taxes?

Explanation / Answer

a. self employment tax 82000*15.3% 12546 b. capital gain tax 10000*15% 1500 c. amount of income subject to ordinary income tax 82000+8000-20000 70000 d. ordinary income tax to pay (15000*10%)+((50000-15000)*15%)+((70000-50000)*25%) 11750 e. tax credit on theire 3 children 1000*3 3000 f total tax bill 12546+1500+11750-3000 22796 g. marginal tax rate 22796/100000 22.80%

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