The Schedule D tax worksheet calculates the tax on the taxable income by
- first decomposing the taxable income in line 1 into lines 19, 20, 28, 31, 37 and 40,
- then taxing on them at different tax rates of regular tax rate, 0, 0.15, 0.20, 0.25, and 0.28. The resulted taxes are in lines 42, 21, 29, 32, 38 and 41.
- finally summing their taxes into line 43
I wonder what the amounts in lines 19, 20, 28, 31, 37 and 40 mean?
Without understanding what they represent, it is hard to understand the rationale underlying the worksheet. My purpose is to
- understand which part of the taxable income is taxed at which tax rate, and
- sort the different parts of the taxable income according to their tax rates, and
- find out which parts have relative high tax rates, and which have low tax rates.
Do you agree that the worksheet was written like a computer program with little readability, e.g. no suggestive names for most lines?
What are some ways for us to understand the worksheet?