Rick, who is single, has been offered a position as a city landscape consultant.

Question

Rick, who is single, has been offered a position as a city landscape consultant. The position pays $92,500 in cash wages. Assume Rick files single and is entitled to one personal exemption. Rick deducts the standard deduction instead of itemized deductions. (use the tax rate schedules.)

2017 Tax Schedule : https://ezto-cf-media.mheducation.com/Media/Connect_Production/bne/accounting/spilker_9e/taxrateschedulea.jpg

A. What is the amount of Rick’s after-tax compensation (ignore payroll taxes)? (Do not round intermediate calculations. Round income tax liability and After-tax compensation to 2 decimal places. Enter deductions as negative amounts)

b-1.  Suppose Rick receives a competing job offer of $87,500 in cash compensation and nontaxable (excluded) benefits worth $4,950. What is the amount of Rick’s after-tax compensation for the competing offer? (Do not round intermediate calculations. Round income tax liability and After-tax compensation to 2 decimal places. Enter deductions as negative amounts)

Description Amount (1) Gross income $92,500 (2) For AGI deductions 0 (3) Adjusted gross income (4) Standard deduction (5) Personal and dependency exemptions (6) Taxable income (7) Income tax liability After-tax compensation

Explanation / Answer

A. Ricks after tax compensation is $66511 calculated as follows :-

b-1 : - Ricks after tax Computation is $ 67711 , calculated as follows :-

$77211

Description Amount Computation 1. Gross Income $92500 2. For AGI deductions 0 3. Adjusted Gross Income $92500 (1-2) 4. Standard Deduction $5800 single tax payer 5. Personal and dependency exemptions $3700 3700 × 1 (personal exemption) 6. Taxable Income $83000 (3)-(4)-(5) 7. Income Tax Liability 16449 (83000-37950)×25% + 5226 (see tax rate schedule for single individuals) Acer tax Computation $76011 (1-7)

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