Question

Kana is a single wage earner with no dependents and taxable income of $205,000 in 2018. Her 2017 taxable income was $155,000 and tax liability was $36,382. Calculate Kana's 2018 income tax liability and the minimum required 2018 annual payment necessary to avoid any penalty. Round your answers to two decimal places. Click here to access the income tax rate schedules. Kana's 2018 income tax liability: $ Kana's minimum required 2018 annual payment necessary to avoid any penalty: $

Answer 1

A.$47,439.50

B.$40,020.20

Step-by-step explanation:

A.Calculation for 2018 income tax liability

Since we are told Kana has a taxable income of the amount of $205,000 and she is as well a single wage earner which means that her income tax will be $45,689.50 including 35% tax rate reason been that her taxable income is above $200,000

Hence,

First step

Kana Taxable income of $205,000 - $200,000

= $5,000

Second step

$5,000 x 35%

= $1,750

Third step is to calculate Kana 2018 income tax liability

2018 Income tax liability=$1,750 + $45,689.50

2018 Income tax liability= $47,439.50

Therefore Kana's 2018 income tax liability will be $47,439.50

B. Calculation for Kana's minimum required 2018 annual payment to avoid penalty

Based on the information given we were told that her 2017 taxable income was the amount of $155,000 while her tax liability was the amount of $36,382 which means that since her Taxable income of the amount of $155,000 is higher than the maximum amount of $150,000 which means we have to multiply Kana tax liability of the amount of $36,382 by 110%

Hence,

Kana's minimum required 2018 annual payment=$36,382 x 110%

Kana's minimum required 2018 annual payment= $40,020.20

Therefore Kana's minimum required 2018 annual payment necessary to avoid any penalty will be $40,020.20