Question

Assume that in addition to the original facts, Jeremy has a long-term capital gain of $10,550. What is Jeremy's tax refund or tax due, including the tax on the capital gain?

Answer 1

To calculate Jeremy's tax refund or tax due, we need to consider his long-term capital gain along with the original facts. The tax rate on long-term capital gains depends on his taxable income. For simplicity, let's assume Jeremy's taxable income falls within the 15% tax bracket.

Step-by-step explanation:

To calculate Jeremy's tax refund or tax due, we need to consider his long-term capital gain along with the original facts. Let's assume Jeremy's other income and deductions remain the same. The tax rate on long-term capital gains depends on his taxable income. For simplicity, let's assume Jeremy's taxable income falls within the 15% tax bracket.

First, we calculate the tax on the long-term capital gain by multiplying the gain by the applicable tax rate. So, $10,550 x 0.15 = $1,582.50.

Next, we subtract the tax on the capital gain from Jeremy's tax liability from the original facts. Let's say his original tax liability is $2,500. So, $2,500 - $1,582.50 = $917.50.

Therefore, Jeremy's tax refund or tax due, including the tax on the capital gain, would be $917.50.