PFIN Online, 1 term (6 months) Printed Access Card for Billingsley/Gitman/Joehnk's PFIN 6
6th Edition
ISBN: 9781337118026
Author: Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk
Publisher: Cengage Learning
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Chapter 14, Problem 7FPE
Summary Introduction
To determine: After tax cost of 401(k) contribution.
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FICA Contributions. Brian makes $25,100 per year. How much can Brian expect to contribute to FICA taxes in 2018? How much will his employer contribute? (Hint: The total
FICA tax rate is 7.65%)
CALEDS
The amount Brian can expect to contribute to FICA taxes in 2018 is $(Round to the nearest cent)
The amount his employer will contribute is $
(Round to the nearest cent.)
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How do I calculate self employment taxes. For example Bob Dylan's self employment earnings are $50,600, what would be his 2021 total self-employment taxes?
1. Luis Gomez is an operations manager for a large manufacturer. He earned $74,500 in 2018 and plans to contribute the maximum allowed to the firm's 401(k) plan. Assuming that Luis is in the 25 percent tax bracket, calculate his taxable income and the amount of his tax savings. Assume an individual employee can put as much as $18,500 into a tax-deferred 401(k) plan. The standard deduction for 2018 is $12,000. If necessary, round the answer for tax savings to the nearest cent.
1A. Taxable Income:
1B. Amount of his tax savings:
2. How much did it actually cost Luis on an after-tax basis to make this retirement plan contribution? If necessary, round the answer to the nearest cent.
$_______
Chapter 14 Solutions
PFIN Online, 1 term (6 months) Printed Access Card for Billingsley/Gitman/Joehnk's PFIN 6
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- What is the main benefit of investing in a 401k, IRA, or other retirement account? Multiple Choice The earnings grow without being taxed yearly. The employer matches the employee’s contributions. The employee receives additional tax deductions yearly. The earnings are tax free once withdrawn. These accounts always end up being worth more than the initial contributions.arrow_forwardHow do I calculate self-employment taxes with self-employment earnings. For example Bob Marks has self-employment earnings of 149,200, what would be his total self-employment taxes for 2021.arrow_forwardSuppose 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?arrow_forward
- Russell and Charmin have current living expenses of $66,260 a year. Estimate the present value amount of income they will need to maintain their level of living in retirement. Assume an average tax rate of 11 percent and a(n) 74 percent income replacement ratio. The estimated present value amount of income they will need to maintain their level of living in retirement is?arrow_forward2. In 2016, the maximum taxable income for Social Security was SI18,500 and the tax rate was 6.2%. a. What is the maximum Social Security tax anyone could have paid in the year 2016? b. Randy had two jobs in 2016. One employer paid him $67,010 and the other paid him $71,200. Each employer took out 6.2% for Social Security taxes. How much did Randy overpay for Social Security taxes in 2016? er Seri l Security was rarrow_forwardUse the 2016 FICA tax rates, shown below, to answer the following question. If a taxpayer is not self-employed and earns $133,000, what are the taxpayer's FICA taxes? Matching Rates Paid by the Employer 7.65% on first $118,500 paid in wages Self-Employed Rates 15.3% on first $118,500 of net profits Employee's Rates 7.65% on first $118,500 of income 1.45% of income in excess of $118,500 1.45% of wages paid in excess of $118,500 2.9% of net profits in excess of $118,500 FICA taxes are $ (Type an integer or a decimal. Round to the nearest cent as needed.)arrow_forward
- Used the 2016 FICA tax rates from below to answer the following question. if a taxpayer is not self-employed and earns $121,000 what are the taxpayers FICA taxes?arrow_forwardINCOME TAX Suppose in 2016 a single man earned $56,240 in wages, earned $3400 in interest, contributed $3000 to a tax-deferred retirement plan, paid $4600 in interest on a home mortgage, donated $1500 to charity, and paid $1700 in state taxes. State the man's gross income. State the man's adjusted gross income (AGI). State the man's taxable income. Find the income tax due using the attached table.arrow_forwardUse the 2016 FICA tax rates, shown below, to answer the following question. If a taxpayer is not self-employed and earns $137,000, what are the taxpayer's FICA taxes? Employee's Rates Matching Rates Paid by the Employer Self-Employed Rates 7.65% on first $118,500 of income 1.45% of income in excess of $118,500 7.65% on first $118,500 paid in wages 1.45% of wages paid in excess of $118,500 15.3% on first $118,500 of net profits 2.9% of net profits in excess of $118,500 FICA taxes are ?$arrow_forward
- 4. 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?arrow_forwarder ork Use the 2016 FICA tax rates, shown below, to answer the following question. If a taxpayer is self-employed and earns $165,000, what are the taxpayer's FICA taxes? Matching Rates Paid by the Employer Employee's Rates 7.65% on first $118,500 of 7.65% on first $118,500 paid income in wages 1.45% of income in excess 1.45% of wages paid in of $118,500 excess of $118,500 Self-Employed Rates 15.3% on first $118,500 of net profits 2.9% of net profits in excess of $118,500 The FICA taxes are $ (Type an integer or a decimal. Round to the nearest cent as needed.) < Quesarrow_forwardUse the 2016 FICA tax rates, shown below, to answer the following question. If a taxpayer is not self-employed and earns $132,000, what are the taxpayer's FICA taxes? Matching Rates Paid by the Employer Employee's Rates 7.65% on first $118,500 of 7.65% on first $118,500 paid income in wages 1.45% of income in excess of $118,500 1.45% of wages paid in excess of $118,500 Self-Employed Rates 15.3% on first $118,500 of net profits 2.9% of net profits in excess of $118,500 FICA taxes are $ (Type an integer or a decimal. Round to the nearest cent as needed.)arrow_forward
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