William is single and had salary income from his position as Chief Financial Officer of Zippy Bank of $450,000 (the 39.6 tax bracket).He also had $35,000 in income from the dividends on the stock of his previous employer.How will William's taxable income of $475,000 (after his standard deduction and personal exemption)be taxed?
A)All $475,000 will be taxed at 39.6%
B)All $475,000 will be taxed at 43.4% due to the surtax
C)Only the $450,000 income from his salary will be taxed at 39.6%
D)His salary income will be taxed at 39.6% and his dividend income at 23.8%

Question

Quizplus · Accepted Answer

William's salary income of $450,000 will be taxed at the top tax bracket of 39.6%, while his dividend income of $35,000 will be subject to the lower capital gains tax rate of 23.8%. The surtax of 3.8% would only apply to certain types of investment income for taxpayers with higher incomes, so it doesn't apply in this case.

William Is Single and Had Salary Income from His Position