Sam, not married with one dependent child, has $225,000 salary and $75,000 qualified dividends. Her taxable income is $280,000. Compute Sam's total tax liability for the current year including both her income tax and net investment income tax, if applicable.

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BlackTom AI · Accepted Answer

Reframing the problem in my own words helps: we’re given Sam’s situation as a single filer with one dependent child, a total salary of 225,000 and qualified dividends of 75,000, making a taxable income of 280,000 for the year. We need to compute the total tax liability including both the regular income tax and the net investment income tax (NIIT) if applicable.

Option A: $55,693.
- If we interpret this as the total tax including NIIT, this number would imply a relatively lower regular income tax portion plus NIIT. To reach about 55,693, the regular tax would have to be notably under 55k, with NIIT contributing a smaller amount or being omitted. Given Sam’s high taxable income, the regular tax alone would typically be well above 55k under most contemporary bracket structures, and NIIT would add a few thousand more rather than reduce the total. This makes 55,693 unlikely unless very favorable offsets exist, which aren’t indicated here.
- In short, this option underestimates the regular tax component for a 280k taxable income and also would require nearly no NIIT impact, which seems inconsistent with the given net investment income of 75k.

Option B: $57,387.
- This figure is a modestly higher total than Option A, suggesting a larger regular tax component with a small NIIT contribution or an NIIT that’s not very large. If the regular tax on 280k is around the mid-50k range and NIIT adds a few thousand, this could be in the plausible neighborhood. However, for most standard calculations, NIIT on 75k of net investment income at 3.8% would add about 2,850, and the regular tax on 280k would typically push the total above 54–55k by a comfortable margin, making 57,387 possible but contingent on the exact bracket structure used.

Option C: $58,532.
- This option sits squarely between the previous two, hinting at a regular tax in the high 40s to mid-50s plus NIIT around 2.8k–3k. If the regular tax on 280k is near 55k and NIIT adds roughly 2,850, the total would land near 57k–58k. This makes 58,532 a plausible total when combining a substantial regular tax with the NIIT amount calculated from 75k of net investment income.

Option D: $59,932.
- A total near 60k would imply either a higher regular tax than typically estimated for 280k of taxable income or an NIIT that’s slightly larger than the standard 2,850. Since NIIT at 3.8% on 75k equals 2,850, the remaining portion would have to come from the regular tax component. Depending on the exact tax brackets and any credits (e.g., child tax credit) that reduce tax, this could be plausible if the regular tax is around 57k and NIIT adds ~2.9k. However, given the numbers presented (taxable income of 280k and 75k of NII), this total is on the high side relative to typical bracket calculations unless there are unusual offsets or credits in play.

Synthesis across options:
- The NIIT portion, if applicable, would be 3.8% of the lesser of net investment income (75,000) or the excess of MAGI over the threshold. For a single filer, the threshold is 200,000. If MAGI is just above the threshold by about 80,000, the NIIT would be the lesser of 75,000 and 80,000, i.e., 75,000, yielding about 2,850 in NIIT. Therefore, any correct total tax should include roughly 2,850 as NIIT.
- The remaining portion of the total tax would be the regular income tax on the 280,000 taxable income. The exact regular tax depends on the year’s tax brackets and any credits (such as the child tax credit). If the regular tax on 280,000 sits in the mid-to-high 50k range, adding about 2,850 NIIT would place the total in the vicinity of the mid-to-high 50k to just under 60k.

Applying these insights to the given options:
- Option A ($55,693) appears low because it under-covers the expected NIIT and/or regular tax for a 280k taxable income with 75k of net investment income.
- Option B ($57,387) sits in a plausible range when combining a substantial regular tax with NIIT around 2.8k.
- Option C ($58,532) also sits plausibly, representing a slightly higher regular tax component plus the NIIT.
- Option D ($59,932) is the upper end, which would require a relatively high regular tax portion along with the NIIT, which is plausible if the year’s brackets produce a larger normal tax.

Given the standard calculation where NIIT is about 2,850 and the regular tax on 280,000 taxable income lands in the high-50k range, the total near 58k is most consistent with Option C. However, without the exact year’s bracket details and any credits being specified in the problem, multiple close values could seem reasonable. The key takeaway is that NIIT contributes a fixed ~2,850 in this scenario, and the bulk of the total comes from the regular income tax on 280,000, which drives the total into the mid-to-high-50k range.

SP25-BL-BUS-A327-1377 Quiz 6

Sam, not married with one dependent child, has $225,000 salary and $75,000 qualified dividends. Her taxable income is $280,000. Compute Sam's total tax liability for the current year including both her income tax and net investment income tax, if applicable.

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