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If I am single, Standard Deduction, $40,000 W-2 wages and $460,000 Qualified Dividend in 2023 what will be my tax liability

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January 18, 2024

Calculating your tax liability involves several steps and depends on the current tax laws and rates. Here's a simplified calculation based on the information you provided and the tax rates for 2023 mentioned in the context:

  1. Standard Deduction: As a single filer, your standard deduction for 2023 is $13,850.

  2. Taxable Income: Subtract the standard deduction from your total income ($40,000 W-2 wages + $460,000 Qualified Dividend = $500,000). So, your taxable income would be $500,000 - $13,850 = $486,150.

  3. Tax on W-2 Wages: Your W-2 wages fall into the 12% tax bracket (for income between $10,275 and $41,775 for single filers in 2023). So, the tax on your W-2 wages would be $40,000 * 12% = $4,800.

  4. Tax on Qualified Dividends: Qualified dividends are generally taxed at a rate of 0%, 15%, or 20%, depending on your taxable income. Given your taxable income, your qualified dividends would likely be taxed at the 20% rate. So, the tax on your qualified dividends would be $460,000 * 20% = $92,000.

  5. Total Tax Liability: Add the tax on your W-2 wages and the tax on your qualified dividends to get your total tax liability. So, your total tax liability would be $4,800 + $92,000 = $96,800.

    Please note that this is a simplified calculation and does not take into account other potential factors that could affect your tax liability, such as other deductions or credits you may be eligible for. It's always a good idea to consult with a tax professional to ensure you're calculating your taxes correctly.
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3. Specific State Extensions: Some states, like Kentucky, honor federal income tax extensions for their state income tax filings. For example, members of the Army, Navy, Marines, Air Force, or Public Health Service serving in a combat zone are not required to file a state income tax return and pay taxes that would otherwise become due during their period of service until 12 months after the service is completed. This extension also applies to members of the National Guard or any branch of the Reserves called to active duty to serve in a combat zone.

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