Qualified Dividends and Capital Gain Tax Worksheet—Line 44 in the instructions of Form 1040 calculates the tax on the taxable income by
- first decomposing the taxable income in line 1 into lines 7, 11, 19, and 22,
- then taxing on them at different tax rates of regular tax rate, 0, 0.15, and 0.20. The resulted taxes are in lines 20, 23 and 24.
- finally summing their taxes into line 25
I wonder what the amounts in lines 7,11, 19, and 22 mean?
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?