pJimmy is a client of yours and he has some holdings in U. S. T-Bonds. Over the past year, he received $500 in interest from these bonds. His accountant has informed him that he is in the 28% tax bracket with all sources of income considered. He lives in the State of California, so his State Income Tax Rate is 9%. What kind of tax liability is Jimmy looking at in relation to the interest received from his U. S. T-Bonds

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Business

Juliet Blair

20 March, 11:56

pJimmy is a client of yours and he has some holdings in U. S. T-Bonds. Over the past year, he received $500 in interest from these bonds. His accountant has informed him that he is in the 28% tax bracket with all sources of income considered. He lives in the State of California, so his State Income Tax Rate is 9%. What kind of tax liability is Jimmy looking at in relation to the interest received from his U. S. T-Bonds

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Phoenix Foster · Answer 1

Jimmy must pay federal income taxes for the $500 earned in dividends during last year = $500 x 28% = $140

Since interest earned on federal securities are not taxed by state or local governments, there is no state tax liability.

Jimmy's total taxes due from dividends earned = $140