Pages Appendix B: Income Tax Calculation Chapter 6 Market Trends & Analysis IBM 320 CAL POLY POMONA IBM320 Market Trends and Analysis Maha Ghosn 1

Income Tax Calculation Learning Objectives Review Income Tax BackgroundLearn about tax tables and the significance of progressive taxesCalculate tax on base Calculate tax liability, given a certain level of taxable income Use logical statements to calculate income taxUse if-then-else statements in Excel

Income Tax Calculation Income Tax  A government tax imposed on individuals and corporate entities.  All taxpayers are subjects to Federal tax income  Some State do not have income tax 24/7 Wall St. reviewed the most recently available data from tax research group the Tax Foundation. Just seven states — Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming — do not levy an individual income tax. Relatively few New Hampshire and Tennessee residents pay tax on their income, but because these states collect taxes on dividends and interest income, they were not included on this list. Read more: States With No Income Tax - 24/7 Wall St.States With No Income Tax - 24/7 Wall St.

Income Tax Calculation Income Tax – 2015 Federal Tax Filling Requirement Threshold Filing StatusAgeMust File a Return If Gross Income Exceeds Single Under 65$10, or older$11,850 Head of Household Under 65$13, or older$14,800 Married Filing Jointly Under 65 (both spouses)$20, or older (one spouse)$21, or older (both spouses)$23,100 Married Filing Separately Any age$4,000 Qualifying Widow(er) with Dependent Children Under 65$16, or older$17,850 Individual Shared Responsibility Provision 2015 Federal Tax Filing Requirement Thresholds

Income Tax Calculation Income Tax California Individual Tax Filling Requirement 2015 California Individual Filing Requirements If your gross income or adjusted gross income is more than the amount shown in the chart below for your filing status, age, and number of dependents, then you have a filing requirement Filing Status Age as of December 31, 2015* California Gross Income California Adjusted Gross Income Dependents 012 or more01 Single or head of household Under 65$16,256$27,489$35,914$13,005$24,238$32, or older$21,706$30,131$36,871$18,455$26,880$33,620 Married/RDP filing jointly or separately Under 65 (both spouses/RDPs) $32,514$43,747$52,172$26,012$37,245$45, or older (one spouse)$37,964$46,389$53,129$31,462$39,887$46, or older (both spouses/RDPs) $43,414$51,839$58,579$36,912$45,337$52,077 Qualifying widow(er) Under 65N/A$27,489$35,914N/A$24,238$32, or olderN/A$30,131$36,871N/A$26,880$33,620 Dependent of another person (Any filing status) Under 65More than your standard deduction 65 or olderMore than your standard deduction * If you turn 65 on January 1, 2016, you are considered to be age 65 at the end of 2015.

Income Tax Calculation Income Tax- Tax on Base  The tax is applied to the net income after certain deductions  The rate becomes progressively higher for larger incomes.  To determine the amount of income tax to be paid, we use a tax table  A tax table contains information about taxable income, tax rate, and the tax on base  It helps us figure out the tax amount on any particular taxable income.  2015 Federal Tax Rate Schedules 2015 Federal Tax Rate Schedules  2015 California Tax Rate Schedules 2015 California Tax Rate Schedules Total taxes that must be paid for all levels of income below the current level FEDERAL Tax Table Single Income BracketsTax Rate Tax on Base $0up to$9, %0 $9,075up to$37, %$923 $36,900up to$90, %$5,179 $89,350up to$189, %$18,641 $186,350up to$411, %$46,627 $405,100up to$413, %$120,927 Above$413, %$123,762

Income Tax Calculation Calculation of Tax Liabilities  Income tax brackets and income tax rates are provided  The calculation involves three steps: 1. Input the information into a tax table 2. Calculate the “Tax on Base” column 3. Write If Statements to calculate the amount of tax liability  Always start with a pseudo code  Combination or words, symbols, and numbers  Helps in understanding the logic of the actual code before writing it in computer format.  Helps setting up the parameters of the problem  Projects the necessary function needed for solving the problem on the computer  Provide a map to convert the if-then-else statements into Excel’s syntax WHILE appropriately using the absolute and relative cell addressing.

Income Tax Calculation