ACCT 421 Chapter Notes - Chapter 8: Alternative Minimum Tax, Qualified Dividend, Independent Contractor

• School: Old Dominion University
• Department: Accounting
• Course: ACCT 421
• Professor: Vivian Paige

Document Summary

Lo 8-(cid:1005): deter(cid:373)i(cid:374)e a ta(cid:454)pa(cid:455)er"s regular ta(cid:454) lia(cid:271)ilit(cid:455) a(cid:374)d ide(cid:374)tif(cid:455) ta(cid:454) issues associated with the process. Individual income is taxed using progressive tax rate schedules with rates ranging from 10 percent to 39. 6 percent. Marginal tax rates depend on filing status and amount of taxable income. Progressive tax rate schedules may lead to either a marriage penalty or marriage benefit for married taxpayers. Long-term capital gains and qualified dividends are taxed at either 0 percent, 15 percent, or 20 percent depending on the amount of taxable income. A 3. 8 percent tax is levied on net investment income for higher income taxpayers. Strategies to shift investment income from parents to children are limited (cid:271)(cid:455) the (cid:862)kiddie ta(cid:454)(cid:863) (cid:449)here(cid:271)(cid:455) (cid:272)hildre(cid:374)"s i(cid:374)(cid:448)est(cid:373)e(cid:374)t income is taxed at the pare(cid:374)ts" (cid:373)argi(cid:374)al ta(cid:454) rate. Lo 8-(cid:1006): co(cid:373)pute a ta(cid:454)pa(cid:455)er"s alter(cid:374)ati(cid:448)e (cid:373)i(cid:374)i(cid:373)u(cid:373) ta(cid:454) lia(cid:271)ilit(cid:455) a(cid:374)d des(cid:272)ri(cid:271)e the tax characteristics of taxpayers most likely to owe the alternative minimum tax.