FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Brad Shin is an operations manager for a large manufacturer. He earned $72,500 in 2015 and plans to contribute the maximum allowed to the firm's 401(k) plan. Assuming that Brad is in the 25% tax bracket, calculate his taxable income and the amount of his tax savings. Assume an individual employee can put as much as $18,000 into a tax-deferred 401(k) plan. Recall that standard deduction is $6,300 in 2015 and personal exemption amount is $4,000. If necessary, round the answer for tax savings to the nearest cent.
| Taxable income | $ |
| Amount of his tax savings | $ |
How much did it actually cost Brad on an after-tax basis to make this retirement plan contribution? If necessary, round the answer to the nearest cent.
$
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