Sherry just received a big promotion at the corporation. Last year her salary was $100,000, but due to her promotion, she expects to earn $180,000 this year. She expects that she will be able to save about $60,000 of her pay raise and is interested in exploring ways to minimize her federal tax liability. List some of the tax-planning opportunities with respect to her salary.

Sherry just received a big promotion at the corporation. Last year her salary was $100,000, but due to her promotion, she expects to earn $180,000 this year. She expects that she will be able to save about $60,000 of her pay raise and is interested in exploring ways to minimize her federal tax liability. List some of the tax-planning opportunities with respect to her salary.

SWFT Corp Partner Estates Trusts

42nd Edition

ISBN:9780357161548

Author:Raabe

Publisher:Raabe

Chapter13: Comparative Forms Of Doing Business

Section: Chapter Questions

Problem 13DQ

See similar textbooks

Similar questions

Ruth has asked for help in determining whether she should receive her $32,500 bonus check in the current year or next year. In the current year, her marginal tax rate is 24% and she anticipates she will be in the 32% marginal tax bracket next year. What advice can you give Ruth? Net revenue from bonus $ Current year Ruth should choose to receive her bonus in the ✓year. Next year
Fatima is about to get a raise at her job and she will go from being paid $37,000 a year to being paid $38891 a year. Since she is single, this will change her tax bracket, and she has heard rumors that it is financially inadvisable to take a raise that will barely change your tax bracket. Does Fatima make more money if she takes the raise? If so, how much more will Fatima make a year if she takes the raise, once federal taxes have been deducted from both incomes?
Fatima is about to get a raise at her job and she will go from being paid $37,000 a year to being paid $38891 a year. Since she is single, this will change her tax bracket, and she has heard rumors that it is financially inadvisable to take a raise that will barely change your tax bracket. Does Fatima make more money if she takes the raise? If so, how much more will Fatima make a year if she takes the raise, once federal taxes have been deducted from both incomes? If she will make the same amount or lose money, enter 0.
Suppose you return to college and earn an MBA, after which you get a middle-management position with General Mills, the firm that makes Lucky Charms and other breakfast cereals. If the tax rates are the same as in 2018 and your starting salary is $90,000, how much will General Mills pay on your behalf in federal social insurance taxes? between $7,000 and $8,000 less than $7,000 O between $9,000 and $10,000 between $8,000 and $9,000 more than $10,000
You analysis was very helpful to Bozena. She has decided to participate in her company's 401(k) plan. She agrees with your analysis (question 4 in the chapter 6 assignment) and your estimate showing $2,133,202 in her retirement account upon retirement. She asks you if she expects to be in the 10% tax bracket upon retirement, and she wishes to fund a retirement that lasts for 25 years, how much after tax money will she have to spend monthly? She conservatively assumes she will earn 5% on her investments during retirement and withdrawals are made at the end of every month. Enter your answer to the nearest dollar without the dollar sign.
What would you do in this situation? Jack is a new tax client. He says he and his previous accountant did not get along very well. Jack owns an automobile Dealership with Sales of $12 Million. He has provided you wiht most of the information you need prepare his tax return, but he has not yet given you the year end inventroy value. You have completed much of the work on hi sreturn but cannot complete it without hte inventroy figure. You have called Jack three times about the inventory. Each time he has interrupted, and asked you what his tax liability will be at alternative innventory levels. What problems do you see and what would you do in this scenerio?
Sahara is an enterprising young woman (age 14). Her math tutoring service will generate $8,400 this year. She has her prior taxed earnings ($7,500) invested in a convertible bond fund that will generate 5% interest and 6% capital gains this year. How much of her income is taxable?
Suppose your friend is being considered for a promotion at work. The promotion is expected to provide your friend an extra 10,000 dollars per year in salary. However, your friend does not want the promotion, because he just looked at his tax return and saw that if he were to earn just 5000 more per year in taxable income, it will push him into a higher tax backet. What should you tell you friend? 1) You are an idiot. Never turn down money, because tax brackets are applied 2) You should arrange for the promotion to only increase the salary by 5000 3) The decision is a logical application of NPV concepts 4) None of these are correct
You were hired as the accountant of XYZ Trading, a sole proprietorship business owned by Mr. Francisco Montano. One of your responsibilities is to prepare the income tax return of Mr. Montano. Annually, Mr. Montano pays P50,000 to P100,000 income tax. He told you to help him lessen his income taxes by 10%. As his accountant, what will you do to help him?
Cathy Coed is a full-time senior student at Big Research University (BRU). Cathy is considered by most as a brilliant student and has been given a $35,000- per year scholarship. In the current year, Cathy Pays the following amounts to attend BRU: Tuition $26,000 Required lab fees $300 Required books and supplies $1,000 Room and board $7,500 What are the tax consequences (i.e., how much is income) of the $35,000 current’s year scholarship to Cathy? In answering this case, use an online tax service with only the internal revenue code database selected. State your key words and which online tax services you used to arrive at your answer.
Jing is concerned about having to repay her Old Age Security (OAS) pension that she receives. This is very stressful as she is on a very limited budget. She knows that if her income is over the minimum threshold amount, that she must repay 15% of this different through her tax return due to the OAS clawback. The maximum monthly OAS pension in 2021 is $635.26. Jing’s net income is estimated at $75,000 for the year. Jing turned 65 years old on January 1, 2021 and has been living in Canada for 25 years. She knows that the amount she will receive is a partial monthly pension earned at the rate of 1/40th of the maximum monthly OAS pension for each year of residence in Canada after the age of 18.
Suppose that Thomas Lee is enrolled in a defined contribution plan in which the employer contributes $8,000 each year. Thomas is earning $80,000 this year and his tax rate is 30 percent (which is not expected to change). Assume that the before- tax rate of return is 8 percent. (a) What is the additional amount of funds that Thomas will have when he reaches retirement in 10 years as a result of this year's service? (b) Suppose that Thomas's employer is planning to reduce half of their contribution to the defined contribution plan. Assume that Thomas would like to keep his retirement funds the same as they would have been with the defined contribution plan. If Thomas's only opportunity to save for retirement is in a nonqualified savings plan (no tax benefits), how much would Thomas need to receive in additional salary (which he would then save) to achieve his objective?