tax cp

pdf

School

American University *

*We aren’t endorsed by this school

Course

604

Subject

Business

Date

Nov 24, 2024

Type

pdf

Pages

3

Uploaded by ElderInternetMeerkat19

Report
12/12/23, 10:21 AM Assignment Print View https://ezto.mheducation.com/api/caa/activity/C15Print?jwt=eyJhbGciOiJSUzI1NiJ9.eyJlbnZpcm9ubWVudCI6InByb2QiLCJpc3MiOiJlenQiLCJwcmlud… 1/3 Score: 3/3 Points 100 %
12/12/23, 10:21 AM Assignment Print View https://ezto.mheducation.com/api/caa/activity/C15Print?jwt=eyJhbGciOiJSUzI1NiJ9.eyJlbnZpcm9ubWVudCI6InByb2QiLCJpc3MiOiJlenQiLCJwcmlud… 2/3 9. Award: 0.27 out of 0.27 points Sherry, who is 52 years of age, opened a Roth IRA three years ago. She has contributed a total of $14,400 to the Roth IRA ($4,800 a year). The current value of the Roth IRA is $23,300. In the current year, Sherry withdraws $21,000 of the account balance to purchase a car. Assuming Sherry's marginal tax rate is 24 percent, how much of the $21,000 withdrawal will she retain after taxes to fund her car purchase? Amount of withdrawal $ 21,000 Non-taxable amount 14,400 Amount subject to tax $ 6,600 Tax rate 24 % Penalty rate 10 % Tax $ 1,584 Penalty $ 660 After tax withdrawal retained $ 18,756 References Problem Difficulty: 2 Medium Learning Objective: 13-04 Compare and determine the tax consequences of traditional and Roth IRAs (individual retirement accounts). Sherry, who is 52 years of age, opened a Roth IRA three years ago. She has contributed a total of $14,400 to the Roth IRA ($4,800 a year). The current value of the Roth IRA is $23,300. In the current year, Sherry withdraws $21,000 of the account balance to purchase a car. Assuming Sherry's marginal tax rate is 24 percent, how much of the $21,000 withdrawal will she retain after taxes to fund her car purchase?
12/12/23, 10:21 AM Assignment Print View https://ezto.mheducation.com/api/caa/activity/C15Print?jwt=eyJhbGciOiJSUzI1NiJ9.eyJlbnZpcm9ubWVudCI6InByb2QiLCJpc3MiOiJlenQiLCJwcmlud… 3/3 $ $ $ $ Amount of withdrawal 21,000 Non-taxable amount 14,400 Amount subject to tax Tax rate 24 % Penalty rate 10 % Tax 1,584 Penalty 660 After tax withdrawal retained 18,756 $ 6,600 F Explanation: Because Sherry has made a withdrawal from her Roth IRA within five years of opening it, she has received a nonqualified distribution. Nonqualified distributions are non-taxable to the extent they are attributable to contributions; the earnings made on such contributions are taxed as ordinary income. Further, because she is not 59 ½ years of age at the time of the distribution, the distribution of earnings is also subject to a 10% penalty. In this instance, Sherry has withdrawn $6,600 of earnings ($21,000 withdrawal − $14,400 contributions) and will pay taxes of $1,584 (24% × $6,600) and a penalty of $660 (10% × $6,600). Of the $21,000 withdrawn, Sherry will retain after-taxes $18,756 ($21,000 withdrawal − $1,584 taxes − $660 penalty).
Your preview ends here
Eager to read complete document? Join bartleby learn and gain access to the full version
  • Access to all documents
  • Unlimited textbook solutions
  • 24/7 expert homework help

Related Documents

BUS 400 Milestone Two.pptx
answer_2 (2).docx
walmart and amazon.docx
Memo format and questions updated Spring 2023.docx
398767968-Evidence Based Practice.docx
02300137.pdf
Business Plan for Vending Kiosk.edited.docx
2879626456-Analysis of SMEs Origin Coffee-revised.docx
Sample 3 (1).pdf
435957143-The Impact of COVID.edited.docx
CAPSIM PRESENTATION2 (3).pptx
JGP3017 HI6005.docx
Recommended textbooks for you
Text book image
BUSN 11 Introduction to Business Student Edition
Business
ISBN:9781337407137
Author:Kelly
Publisher:Cengage Learning
Text book image
Essentials of Business Communication (MindTap Cou...
Business
ISBN:9781337386494
Author:Mary Ellen Guffey, Dana Loewy
Publisher:Cengage Learning
Text book image
Accounting Information Systems (14th Edition)
Business
ISBN:9780134474021
Author:Marshall B. Romney, Paul J. Steinbart
Publisher:PEARSON
Text book image
Introduction to Business
Business
ISBN:9781947172548
Author:OpenStax
Publisher:OpenStax College
Text book image
International Business: Competing in the Global M...
Business
ISBN:9781259929441
Author:Charles W. L. Hill Dr, G. Tomas M. Hult
Publisher:McGraw-Hill Education
Text book image
Bcom
Business
ISBN:9780357026595
Author:LEHMAN, Carol M.
Publisher:Cengage Learning,
SEE MORE TEXTBOOKS
Recommended textbooks for you
Text book image
BUSN 11 Introduction to Business Student Edition
Business
ISBN:9781337407137
Author:Kelly
Publisher:Cengage Learning
Text book image
Essentials of Business Communication (MindTap Cou...
Business
ISBN:9781337386494
Author:Mary Ellen Guffey, Dana Loewy
Publisher:Cengage Learning
Text book image
Accounting Information Systems (14th Edition)
Business
ISBN:9780134474021
Author:Marshall B. Romney, Paul J. Steinbart
Publisher:PEARSON
Text book image
Introduction to Business
Business
ISBN:9781947172548
Author:OpenStax
Publisher:OpenStax College
Text book image
International Business: Competing in the Global M...
Business
ISBN:9781259929441
Author:Charles W. L. Hill Dr, G. Tomas M. Hult
Publisher:McGraw-Hill Education
Text book image
Bcom
Business
ISBN:9780357026595
Author:LEHMAN, Carol M.
Publisher:Cengage Learning,
SEE MORE TEXTBOOKS