Taxable Income and Tax Brackets

Oct 13, 2025 by talynt.org 67 views

Understanding Hope's Tax Obligations

As a single taxpayer, Hope earns a taxable income of $45,000 per year working as a salesperson. In addition to her income, she has long-term capital gains on an investment that cost her $1,000. In this article, we will explore Hope's tax situation and determine the correct answer to her tax-related questions.

Taxable Income and Tax Brackets

Hope's taxable income is $45,000, which falls within the 22% tax bracket. As a single taxpayer, she is subject to a progressive tax system, where her tax rate increases as her income increases. The tax brackets for single taxpayers in the 2022 tax year are as follows:

10% tax bracket: $0 - $9,875
12% tax bracket: $9,876 - $40,125
22% tax bracket: $40,126 - $80,250
24% tax bracket: $80,251 - $164,700
32% tax bracket: $164,701 - $214,700
35% tax bracket: $214,701 - $518,400
37% tax bracket: $518,401 and above

Long-Term Capital Gains Taxation

Hope has long-term capital gains on an investment that cost her $1,000. Long-term capital gains are taxed at a lower rate than ordinary income. The tax rates for long-term capital gains are as follows:

0% tax rate: $0 - $40,400 (single taxpayers)
15% tax rate: $40,401 - $445,850 (single taxpayers)
20% tax rate: $445,851 and above (single taxpayers)

Calculating Hope's Tax Liability

To calculate Hope's tax liability, we need to determine her total tax liability, including both her ordinary income tax and her long-term capital gains tax.

Hope's ordinary income tax liability is calculated as follows:

Taxable income: $45,000
Tax rate: 22%
Tax liability: $45,000 x 0.22 = $9,900

Hope's long-term capital gains tax liability is calculated as follows:

Long-term capital gains: $200
Tax rate: 0% (since her long-term capital gains are below the $40,400 threshold)
Tax liability: $0

Total Tax Liability

Hope's total tax liability is the sum of her ordinary income tax liability and her long-term capital gains tax liability.

Total tax liability: $9,900 (ordinary income tax) + $0 (long-term capital gains tax) = $9,900

Conclusion

In conclusion, Hope's tax situation is as follows:

Taxable income: $45,000
Long-term capital gains: $200
Ordinary income tax liability: $9,900
Long-term capital gains tax liability: $0
Total tax liability: $9,900

Hope's tax situation is relatively straightforward, with a total tax liability of $9,900. However, it is essential to note that tax laws and regulations can change, and individual circumstances may affect tax liability. It is always recommended to consult with a tax professional to ensure accurate and up-to-date tax information.

Frequently Asked Questions

Q: What is Hope's tax rate?

A: Hope's tax rate is 22% for her ordinary income tax.

Q: How much is Hope's long-term capital gains tax liability?

A: Hope's long-term capital gains tax liability is $0, since her long-term capital gains are below the $40,400 threshold.

Q: What is Hope's total tax liability?

A: Hope's total tax liability is $9,900, which is the sum of her ordinary income tax liability and her long-term capital gains tax liability.

Q: Can Hope's tax liability change?

A: Yes, Hope's tax liability can change if her income or long-term capital gains change, or if tax laws and regulations change.

Q: Should Hope consult with a tax professional?

Understanding Hope's Tax Obligations

Q&A: Hope's Tax Situation

Q: What is Hope's tax rate?

A: Hope's tax rate is 22% for her ordinary income tax. This is because her taxable income of $45,000 falls within the 22% tax bracket.

Q: How much is Hope's long-term capital gains tax liability?

A: Hope's long-term capital gains tax liability is $0, since her long-term capital gains of $200 are below the $40,400 threshold for the 0% tax rate.

Q: What is Hope's total tax liability?

A: Hope's total tax liability is $9,900, which is the sum of her ordinary income tax liability and her long-term capital gains tax liability.

Q: Can Hope's tax liability change?

A: Yes, Hope's tax liability can change if her income or long-term capital gains change, or if tax laws and regulations change.

Q: Should Hope consult with a tax professional?

A: Yes, it is always recommended to consult with a tax professional to ensure accurate and up-to-date tax information.

Q: What are the tax brackets for single taxpayers in the 2022 tax year?

A: The tax brackets for single taxpayers in the 2022 tax year are as follows:

10% tax bracket: $0 - $9,875
12% tax bracket: $9,876 - $40,125
22% tax bracket: $40,126 - $80,250
24% tax bracket: $80,251 - $164,700
32% tax bracket: $164,701 - $214,700
35% tax bracket: $214,701 - $518,400
37% tax bracket: $518,401 and above

Q: What are the tax rates for long-term capital gains?

A: The tax rates for long-term capital gains are as follows:

0% tax rate: $0 - $40,400 (single taxpayers)
15% tax rate: $40,401 - $445,850 (single taxpayers)
20% tax rate: $445,851 and above (single taxpayers)

Q: How is Hope's ordinary income tax liability calculated?

A: Hope's ordinary income tax liability is calculated as follows:

Taxable income: $45,000
Tax rate: 22%
Tax liability: $45,000 x 0.22 = $9,900

Q: How is Hope's long-term capital gains tax liability calculated?

A: Hope's long-term capital gains tax liability is calculated as follows:

Long-term capital gains: $200
Tax rate: 0% (since her long-term capital gains are below the $40,400 threshold)
Tax liability: $0

Q: What is the difference between ordinary income tax and long-term capital gains tax?

A: Ordinary income tax is tax on income earned from a job or business, while long-term capital gains tax is tax on gains from the sale of investments held for more than one year.

Q: Can Hope deduct her long-term capital gains on her tax return?

A: Yes, Hope can deduct her long-term capital gains on her tax return, but only if she has a net capital loss. If she has a net capital loss, she can use it to offset her ordinary income tax liability.

Q: What is a net capital loss?

A: A net capital loss is the difference between an individual's capital gains and capital losses. If an individual has a net capital loss, they can use it to offset their ordinary income tax liability.

Q: Can Hope use her net capital loss to offset her ordinary income tax liability?

A: Yes, Hope can use her net capital loss to offset her ordinary income tax liability. However, she can only use up to $3,000 of her net capital loss to offset her ordinary income tax liability. Any excess net capital loss can be carried forward to future tax years.

Q: What is the carryover rule for net capital losses?

A: The carryover rule for net capital losses states that any excess net capital loss can be carried forward to future tax years. This means that if Hope has a net capital loss in one year, she can use it to offset her ordinary income tax liability in future years.

Q: Can Hope use her carryover net capital loss to offset her ordinary income tax liability in future years?

A: Yes, Hope can use her carryover net capital loss to offset her ordinary income tax liability in future years. However, she can only use up to $3,000 of her carryover net capital loss to offset her ordinary income tax liability in each future year.