Mr.and Mrs.David file a joint tax return.They have $169,300 taxable income in 2019,$120,300 of which is ordinary income and $49,000 of which is taxed at a 15% preferential rate.Compute their tax savings from the preferential rate.

Question

Quizplus · Accepted Answer

The tax savings from the preferential rate is calculated by finding the difference between the tax on $49,000 at the ordinary rate and the tax at the preferential rate. Assuming the ordinary rate is 22% (for simplicity), the tax on $49,000 would be $10,780. At a 15% preferential rate, the tax is $7,350. The savings is $10,780 - $7,350 = $3,430, which is closest to option B.

MrAnd MrsDavid File a Joint Tax Return