Calculation of Income Tax for Individuals

Calculating your income tax is not a simple matter once you get to taxable income.  The reason is because we have different tax rates for ordinary income and capital gain income which includes qualified dividends. Tax rates for ordinary income range from 10% to 37%. Capital gain and qualified dividends can have the following tax rates: 0%, 15%, 20%, 25%, and 28% depending on level of income.  You have to carve out all of the different types of income getting preferential rates from taxable ordinary income and do a series of calculations. I am so grateful my tax software does this calculation for me on the schedule D tax worksheet and the qualified dividends and capital gain tax worksheet. These worksheets are so complicated that the IRS did them wrong for all 2018 returns with certain types of gains processed prior to May 15 when they caught their mistake. Please bear with me. Let me give you an example of the calculation assuming the following: taxable income of $153,818. qualified dividends of $12,433,  long term capital gain of $17,289, and unrecaptured  section 1250 gain of $120. The first calculation of capital gain tax is 12,433 + 17,289 -120=29,602 x .15=$4,440. The second calculation of ordinary income tax is 153,818-29,602=124,216 x .22 -8,121=$19,207. The tax due is the  two amounts added together  4,440 + 19,207=$23,647.