Question 17
Sometimes taxpayers must estimate tax owed using a simplified, fictional rate to practice. Suppose a taxpayer has taxable income of $75,000 after deductions and a flat example tax rate of 12% (this is a fictional simplification for practice). Multiply taxable income by the rate to estimate tax liability; then compare to withheld amounts to see if adjustments are needed. This exercise is purely illustrative — do not use it as legal guidance. It helps you practice percentage math needed for estimated payments or withholding changes.
Using the example numbers, estimate the tax liability: taxable income $75,000 × 12% (fictional).
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By Wise Wallet
Tax-loss harvesting can offset realized gains but is limited by wash-sale rules that restrict repurchasing identical securities too soon.