SINGLE Persons If the Adjusted Wage Amount (line 1d) is The tentative amount to withhold is… Plus this percentage… of the amount that the wage exceeds… at least… But less than… A B C D E $0 $4,350 $0.00 0% $0 $4,350 $14,625 $0.00 10% $4,350 $14,625 $46,125 $1,027.50 12% $14,625 $46,125 $93,425 $4,807.50 22% $46,125 $93,425 $174,400 $15,213.50 24% $93,425 $174,400 $220,300 $34,647.50 32% $174,400 $220,300 $544,250 $49,335.50 35% $220,300 $544,250 $162,718.00 $162,718.00 37% $544,250 Assume you are offered a job with a salary of $42,000 and a bonus of 7.5% based on your performance during the year. If you receive your full bonus at the end of the year, what is your total (gross or before tax) pay for the year? Assume you are filing under single status. Using the income tax table provided below, answer the following questions. ANNUAL Payroll Period (a) SINGLE person (including head of household) What is your marginal tax rate? What is your average (effective) tax rate? First determine the actual tax withheld from your income. Ignore payroll and state taxes. Use the income calculated in part 1.a. Why do the two tax rates vary? Explain why the US tax code is structured in this manner. Do you agree with this structure? Why or why not? Calculate your take-home pay using the pay in part 1.a. and the taxes calculated in part 1.b.ii. (ignore employment taxes) Which is the relevant tax rate (marginal or average) as you consider whether or not you should work a second job and increase your income to help you pay off your student loans more quickly? Why? Your employer offers a 401k that you can invest in as an employee of the firm. If you put in 3% of your pre-tax income (listed in question 1.a.), your employer will match 3%. Include the bonus in your total income. Assuming you put in the full 3% during your first year of employment, how much will your take home pay be reduced? In other words, what is the difference between your take-home pay without the 401k contribution (from part 1.b.iv.) and your take-home pay after a 401k contribution? If you contribute the 3% to your 401k and your employer matches, how much will you have saved in total in your 401K account for the year (counting your employer contribution and your contribution)?

SINGLE Persons If the Adjusted Wage Amount (line 1d) is The tentative amount to withhold is… Plus this percentage… of the amount that the wage exceeds… at least… But less than… A B C D E $0 $4,350 $0.00 0% $0 $4,350 $14,625 $0.00 10% $4,350 $14,625 $46,125 $1,027.50 12% $14,625 $46,125 $93,425 $4,807.50 22% $46,125 $93,425 $174,400 $15,213.50 24% $93,425 $174,400 $220,300 $34,647.50 32% $174,400 $220,300 $544,250 $49,335.50 35% $220,300 $544,250 $162,718.00 $162,718.00 37% $544,250 Assume you are offered a job with a salary of $42,000 and a bonus of 7.5% based on your performance during the year. If you receive your full bonus at the end of the year, what is your total (gross or before tax) pay for the year? Assume you are filing under single status. Using the income tax table provided below, answer the following questions. ANNUAL Payroll Period (a) SINGLE person (including head of household) What is your marginal tax rate? What is your average (effective) tax rate? First determine the actual tax withheld from your income. Ignore payroll and state taxes. Use the income calculated in part 1.a. Why do the two tax rates vary? Explain why the US tax code is structured in this manner. Do you agree with this structure? Why or why not? Calculate your take-home pay using the pay in part 1.a. and the taxes calculated in part 1.b.ii. (ignore employment taxes) Which is the relevant tax rate (marginal or average) as you consider whether or not you should work a second job and increase your income to help you pay off your student loans more quickly? Why? Your employer offers a 401k that you can invest in as an employee of the firm. If you put in 3% of your pre-tax income (listed in question 1.a.), your employer will match 3%. Include the bonus in your total income. Assuming you put in the full 3% during your first year of employment, how much will your take home pay be reduced? In other words, what is the difference between your take-home pay without the 401k contribution (from part 1.b.iv.) and your take-home pay after a 401k contribution? If you contribute the 3% to your 401k and your employer matches, how much will you have saved in total in your 401K account for the year (counting your employer contribution and your contribution)?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

SINGLE Persons
If the Adjusted Wage Amount (line 1d) is	The tentative amount to withhold is…	Plus this percentage…	of the amount that the wage exceeds…
at least…	But less than…
A	B	C	D	E
$0	$4,350	$0.00	0%	$0
$4,350	$14,625	$0.00	10%	$4,350
$14,625	$46,125	$1,027.50	12%	$14,625
$46,125	$93,425	$4,807.50	22%	$46,125
$93,425	$174,400	$15,213.50	24%	$93,425
$174,400	$220,300	$34,647.50	32%	$174,400
$220,300	$544,250	$49,335.50	35%	$220,300
$544,250	$162,718.00	$162,718.00	37%	$544,250

Assume you are offered a job with a salary of $42,000 and a bonus of 7.5% based on your performance during the year.
1. If you receive your full bonus at the end of the year, what is your total (gross or before tax) pay for the year?

Assume you are filing under single status. Using the income tax table provided below, answer the following questions.

ANNUAL Payroll Period (a) SINGLE person (including head of household)

What is your marginal tax rate?

What is your average (effective) tax rate? First determine the actual tax withheld from your income. Ignore payroll and state taxes. Use the income calculated in part 1.a.

Why do the two tax rates vary? Explain why the US tax code is structured in this manner. Do you agree with this structure? Why or why not?

Calculate your take-home pay using the pay in part 1.a. and the taxes calculated in part 1.b.ii. (ignore employment taxes)

Which is the relevant tax rate (marginal or average) as you consider whether or not you should work a second job and increase your income to help you pay off your student loans more quickly? Why?

Your employer offers a 401k that you can invest in as an employee of the firm. If you put in 3% of your pre-tax income (listed in question 1.a.), your employer will match 3%. Include the bonus in your total income.
1. Assuming you put in the full 3% during your first year of employment, how much will your take home pay be reduced? In other words, what is the difference between your take-home pay without the 401k contribution (from part 1.b.iv.) and your take-home pay after a 401k contribution?

If you contribute the 3% to your 401k and your employer matches, how much will you have saved in total in your 401K account for the year (counting your employer contribution and your contribution)?

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