Jill and George are married and file a joint return. They expect to have $425,000 of taxable income in the next year and are considering whether to purchase a personal residence that would provide additional tax deductions of $40,000 for mortgage interest and real estate taxes. tax rate schedule for the Married filing jointly filing status.) Read the requirements2. Requirement a. What is their marginal tax rate for purposes of making this decision? (Enter amounts as percentages to one decimal place.) What is the marginal tax rate if the personal residence is not purchased? % What is the marginal tax rate if the personal residence is purchased? % Requirement b. What is the tax savings if the residence is acquired? (Do not round intermediary calculations. Only round the amounts you input in the cells to the nearest cent.) Tax without purchase of personal residence Tax with purchase of personal residence Tax savings 1: Reference Married, Filing Joint and Surviving Spouse If taxable income is: The tax is: Not over $19,400. . . . . . . . . . . . . . . . 10% of taxable income. Over $19,400 but not over $78,950 $1,940.00 + 12% of the excess over $19,400. Over $78,950 but not over $168,400 $9,086.00 + 22% of the excess over $78,950. Over $168,400 but not over $321,450 $28,765.00 + 24% of the excess over $168,400. Over $321,450 but not over $408,200 $65,497.00 + 32% of the excess over $321,450. Over $408,200 but not over $612,350 $93,257.00 + 35% of the excess over $408,200. Over $612,350. . . . . . . . . . . . . . . . . . $164,709.50 + 37% of the excess over $612,350. 2: Requirements a. What is their marginal tax rate for purposes of making this decision? b. What is the tax savings if the residence is acquired?

Income Tax Fundamentals 2020

38th Edition

ISBN:9780357391129

Author:WHITTENBURG

Publisher:WHITTENBURG

Chapter1: The Individual Income Tax Return

Section: Chapter Questions

Problem 13P

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Jill and George are married and file a joint return. They expect to have $425,000 of taxable income in the next year and are considering whether to purchase a personal residence that would provide additional tax deductions of $40,000 for mortgage interest and real estate taxes.

tax rate schedule for the Married filing jointly filing status.)

Read the requirements2.

Requirement a. What is their marginal tax rate for purposes of making this decision? (Enter amounts as percentages to one decimal place.)

What is the marginal tax rate if the personal residence is not purchased?		%
What is the marginal tax rate if the personal residence is purchased?		%

Requirement b. What is the tax savings if the residence is acquired? (Do not round intermediary calculations. Only round the amounts you input in the cells to the nearest cent.)

Tax without purchase of personal residence
Tax with purchase of personal residence
Tax savings

1: Reference

Married, Filing Joint and Surviving Spouse

If taxable income is:	The tax is:
Not over $19,400. . . . . . . . . . . . . . . .	10% of taxable income.
Over $19,400 but not over $78,950	$1,940.00 + 12% of the excess over $19,400.
Over $78,950 but not over $168,400	$9,086.00 + 22% of the excess over $78,950.
Over $168,400 but not over $321,450	$28,765.00 + 24% of the excess over $168,400.
Over $321,450 but not over $408,200	$65,497.00 + 32% of the excess over $321,450.
Over $408,200 but not over $612,350	$93,257.00 + 35% of the excess over $408,200.
Over $612,350. . . . . . . . . . . . . . . . . .	$164,709.50 + 37% of the excess over $612,350.

2: Requirements

a.	What is their marginal tax rate for purposes of making this decision?
b.	What is the tax savings if the residence is acquired?

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