50. Her employer offers a child and dependent care reimbursement plan that allows up to $7,850 of ursed in exchange for a $7,850 reduction in the employee's salary. Because Ava and Leo have two sts $8,635 each year, Ava is wondering if she should sign up for the program instead of taking adv dent care expenses. Analyze the effect of the two alternatives. Assume a FICA tax rate of 7.65%. t round intermediate computations. If required, round your final answers to the nearest to view Percentage Credit based on Adjusted Gross Income. Ava and Leo take advantage of the plan, they would ded from save income taxes because the reimb associated with participating in of FICA taxes due to the reduction in sala gross income. The income tax savings . In addition, Ava will save atively, if Ava does not take advantage of the plan, their child and dependent care tax credit will be eo's income taxes will be $ if they do not participate in the
50. Her employer offers a child and dependent care reimbursement plan that allows up to $7,850 of ursed in exchange for a $7,850 reduction in the employee's salary. Because Ava and Leo have two sts $8,635 each year, Ava is wondering if she should sign up for the program instead of taking adv dent care expenses. Analyze the effect of the two alternatives. Assume a FICA tax rate of 7.65%. t round intermediate computations. If required, round your final answers to the nearest to view Percentage Credit based on Adjusted Gross Income. Ava and Leo take advantage of the plan, they would ded from save income taxes because the reimb associated with participating in of FICA taxes due to the reduction in sala gross income. The income tax savings . In addition, Ava will save atively, if Ava does not take advantage of the plan, their child and dependent care tax credit will be eo's income taxes will be $ if they do not participate in the
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
![Ava and her husband, Leo, file a joint return and are in the 32% Federal income tax bracket (AGI is $354,951) in 2021. Ava's salary is
$93,850. Her employer offers a child and dependent care reimbursement plan that allows up to $7,850 of qualifying expenses to be
reimbursed in exchange for a $7,850 reduction in the employee's salary. Because Ava and Leo have two minor children requiring child care
that costs $8,635 each year, Ava is wondering if she should sign up for the program instead of taking advantage of the credit for child and
dependent care expenses. Analyze the effect of the two alternatives. Assume a FICA tax rate of 7.65%.
Do not round intermediate computations. If required, round your final answers to the nearest dollar.
Click to view Percentage Credit based on Adjusted Gross Income.
If Ava and Leo take advantage of the plan, they would
• save income taxes because the reimbursement of child care expenses is
a.
excluded from
• gross income. The income tax savings
associated with participating in the plan would be
In addition, Ava will save $
of FICA taxes due to the reduction in salary.
Alternatively, if Ava does not take advantage of the plan, their child and dependent care tax credit will be $
. Therefore Ava
and Leo's income taxes will be $
- if they do not participate in the plan.
b. Assume, instead, that Ava's salary was $30,000 and Ava and Leo's AGI is $23,000 and they are in the 10% tax bracket.
The
associated with participating in the plan would be $
In addition, Ava will save
of FICA taxes due to the reduction in salary.
Alternatively, if Ava does not take advantage of the plan, their child and dependent care tax credit will be $
. Therefore Ava
and Leo's income taxes will be $
- if they do not participate in the plan.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F03eecdbf-da19-4f5c-a265-cf269087e6dd%2F08a6d8ea-1264-4c28-b7c3-c6ae3ba00de8%2Fx09rrff_processed.png&w=3840&q=75)
Transcribed Image Text:Ava and her husband, Leo, file a joint return and are in the 32% Federal income tax bracket (AGI is $354,951) in 2021. Ava's salary is
$93,850. Her employer offers a child and dependent care reimbursement plan that allows up to $7,850 of qualifying expenses to be
reimbursed in exchange for a $7,850 reduction in the employee's salary. Because Ava and Leo have two minor children requiring child care
that costs $8,635 each year, Ava is wondering if she should sign up for the program instead of taking advantage of the credit for child and
dependent care expenses. Analyze the effect of the two alternatives. Assume a FICA tax rate of 7.65%.
Do not round intermediate computations. If required, round your final answers to the nearest dollar.
Click to view Percentage Credit based on Adjusted Gross Income.
If Ava and Leo take advantage of the plan, they would
• save income taxes because the reimbursement of child care expenses is
a.
excluded from
• gross income. The income tax savings
associated with participating in the plan would be
In addition, Ava will save $
of FICA taxes due to the reduction in salary.
Alternatively, if Ava does not take advantage of the plan, their child and dependent care tax credit will be $
. Therefore Ava
and Leo's income taxes will be $
- if they do not participate in the plan.
b. Assume, instead, that Ava's salary was $30,000 and Ava and Leo's AGI is $23,000 and they are in the 10% tax bracket.
The
associated with participating in the plan would be $
In addition, Ava will save
of FICA taxes due to the reduction in salary.
Alternatively, if Ava does not take advantage of the plan, their child and dependent care tax credit will be $
. Therefore Ava
and Leo's income taxes will be $
- if they do not participate in the plan.
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