Edward,a single taxpayer,has AGI of $50,000 which includes $1,000 of qualified dividends.Edward has $7,000 of itemized deductions.What is his 2013 federal income tax?

Question

Quizplus · Accepted Answer

First, we need to calculate Edward's taxable income by subtracting his itemized deductions from his AGI: 
$50,000 - $7,000 = $43,000

Since Edward has qualified dividends, we need to use the Qualified Dividends and Capital Gain Tax Worksheet to calculate his tax. Using the worksheet, we find that his tax on the $1,000 of qualified dividends is $150.

Next, we need to calculate his regular income tax using the tax brackets for single filers in 2013:
- 10% on income up to $8,925: $893
- 15% on income between $8,925 and $36,250: $4,429.25
- 25% on income between $36,250 and $87,850: $1,265.75
- Total regular income tax: $6,588

Finally, we add his regular income tax and his tax on qualified dividends:
$6,588 + $150 = $5,604.

Therefore, the correct answer is B, $5,604.

Edward,a Single Taxpayer,has AGI of $50,000 Which Includes $1,000 of Qualified