Calculate the 2020 total tax for Gordon​ Geist, a single taxpayer without dependents and no itemized deductions. He has an active income of ​$37 comma 000​, a​ short-term capital gain income of ​$3 comma 000 from the sale of​ stock, and ​$8 comma 400 from book royalties. What is​ Gordon's average tax rate on his overall​ (total) income?

To calculate Gordon Geist's total tax and average tax rate for 2020, we'll need to follow these steps:

### 1. **Determine Total Income**
Gordon has three types of income:
- Active income: $37,000
- Short-term capital gains: $3,000
- Royalties: $8,400

**Total income = $37,000 + $3,000 + $8,400 = $48,400**

### 2. **Calculate Taxable Income**
Since Gordon is a single filer without dependents and no itemized deductions, we will apply the **standard deduction** for 2020.

- Standard deduction for single filers in 2020: **$12,400**

**Taxable income = Total income - Standard deduction**
\[
= 48,400 - 12,400 = 36,000
\]

### 3. **Calculate Federal Tax Liability**
For 2020, the tax brackets for a single filer are as follows:

| Tax Rate  | Income Range            |
|-----------|-------------------------|
| 10%       | $0 to $9,875            |
| 12%       | $9,876 to $40,125       |

Gordon's taxable income of $36,000 will be taxed as follows:

- The first **$9,875** is taxed at **10%**:
  \[
  9,875 \times 0.10 = 987.50
  \]
- The remaining **$36,000 - $9,875 = $26,125** is taxed at **12%**:
  \[
  26,125 \times 0.12 = 3,135
  \]

So, Gordon’s total federal tax liability is:
\[
987.50 + 3,135 = 4,122.50
\]

### 4. **Calculate the Average Tax Rate**
The average tax rate is calculated by dividing the total tax by the total income.

\[
\text{Average Tax Rate} = \frac{\text{Total Tax}}{\text{Total Income}} = \frac{4,122.50}{48,400} \approx 0.0851 \text{ or } 8.51\%
\]

### Summary
- **Total tax liability**: $4,122.50
- **Average tax rate**: 8.51%

Would you like further details or have any questions?

### 5 Relative Questions:
1. How do different types of income (capital gains, royalties, etc.) affect the tax calculation?
2. What would happen to Gordon's tax liability if he itemized deductions instead of using the standard deduction?
3. How are short-term and long-term capital gains taxed differently?
4. How would Gordon’s tax liability change if he earned an additional $10,000 in active income?
5. What are the tax implications for royalties in other scenarios, such as for a business?

**Tip**: Keep in mind that **short-term capital gains** are taxed as ordinary income, while long-term gains have preferential tax rates.

Calculate the 2020 total tax for Gordon Geist, a single taxpayer without dependents and no itemized deductions. He has an active income of $37,000, a short-term capital gain income of $3,000 from the sale of stock, and $8,400 from book royalties. What is Gordon's average tax rate on his overall (total) income?

Explore a step-by-step guide to calculating the 2020 total tax for Gordon Geist, a single taxpayer with active income, short-term capital gains, and royalties. Learn how to determine taxable income, apply tax brackets, and calculate the average tax rate. Suitable for college-level finance and taxation studies.

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