Henrich is a single taxpayer. In 2020, his taxable income is $450,000. What is his income tax and net investment income tax liability in each of the following alternative scenarios? All of his income is salary from his employer. His $450,000 of taxable income includes $2,000 of long-term capital gain that is taxed at preferential rates. Now assume that Henrich has $195,000 of taxable income, which includes $55,000 of long-term capital gain that is taxed at preferential rates. Assume his modified AGI is $210,000.
Henrich is a single taxpayer. In 2020, his taxable income is $450,000. What is his income tax and net investment income tax liability in each of the following alternative scenarios?
- All of his income is salary from his employer.
- His $450,000 of taxable income includes $2,000 of long-term
capital gain that is taxed at preferential rates. - Now assume that Henrich has $195,000 of taxable income, which includes $55,000 of long-term capital gain that is taxed at preferential rates. Assume his modified AGI is $210,000.
Income tax liability:
It is the amount of tax a taxpayer is liable to pay on the taxable income earned. The tax liability is determined by applying the applicable federal tax rates corresponding to the year in which the income is year.
Net investment income tax liability:
It is the income tax imposed under Section 1411 of the Internal revenue code. As per the provisions of the code, the net investment income tax liability is determined at the rate of 3.8% on certain net investment incomes (preferential incomes) of individuals, estates and trusts which have income earned over threshold limits defined by the statue. For the year 2022, the threshold limit is $200,000 for single filers.
Trending now
This is a popular solution!
Step by step
Solved in 4 steps with 3 images
