Alice J. and Bruce M. Byrd are married taxpayers who file a joint return. Their

ID: 2655637 • Letter: A

Question

Alice J. and Bruce M. Byrd are married taxpayers who file a joint return. Their Social Security...

Alice J. and Bruce M. Byrd are married taxpayers who file a joint return. Their Social
Security numbers are 123-45-6789 and 111-11-1111, respectively. Alice’s birthday is Sep-
tember 21, 1965, and Bruce’s is June 27, 1964. They live at 473 Revere Avenue, Lowell,
MA 01850. Alice is the office manager for Lowell Dental Clinic, 433 Broad Street, Low-
ell, MA 01850 (employer identification number 98-7654321). Bruce is the manager of
a Super Burgers fast-food outlet owned and operated by Plymouth Corporation, 1247
Central Avenue, Hauppauge, NY 11788 (employer identification number 11-1111111).
The following information is shown on their Wage and Tax Statements (Form W–2)
for 2013.

Description Alice Bruce
1 Wages, tips, other compensation $58,000 $62,100
2 Federal income tax withheld 4,500 6,300
3 Social Security wages 58,000 62,100
4 Social Security tax withheld 2,436 2,608
5 Medicare wages and tips 58,000 62,100
6 Medicare tax withheld 841 900
15 State Massachusetts Massachusetts
16 State wages, tips, etc. 58,000 62,100
17 State income tax withheld 2,950 3,100

The Byrds provide over half of the support of their two children, Cynthia (born January
25, 1989, Social Security number 123-45-6788) and John (born February 7, 1993, Social
Security number 123-45-6786). Both children are full-time students and live with the
Byrds except when they are away at college. Cynthia earned $4,200 from a summer
internship in 2013, and John earned $3,800 from a part-time job.

During 2013, the Byrds furnished 60% of the total support of Bruce’s widower father,
Sam Byrd (born March 6, 1937, Social Security number 123-45-6787). Sam lived alone
and covered the rest of his support with his Social Security benefits. Sam died in Novem-
ber, and Bruce, the beneficiary of a policy on Sam’s life, received life insurance proceeds
of $800,000 on December 28.
The Byrds had the following expenses relating to their personal residence during
2013:

Property taxes $5,000
Qualified interest on home mortgage 8,800
Repairs to roof 5,750
Utilities 4,100
Fire and theft insurance 1,900
The following facts relate to medical expenses for 2013:
Medical insurance premiums $4,500
Doctor bill for Sam incurred in 2012 and not paid until 2013 7,600
Operation for Sam 8,500
Prescription medicines for Sam 900
Hospital expenses for Sam 3,500
Reimbursement from insurance company, received in 2013 3,600

The medical expenses for Sam represent most of the 60% that Bruce contributed to-

ward his father’s support.

Other relevant information follows:

• When they filed their 2011 state return in 2012, the Byrds paid additional state

income tax of $900.

• During 2013, Alice and Bruce attended a dinner dance sponsored by the Lowell

Police Disability Association (a qualified charitable organization). The Byrds paid

$300 for the tickets. The cost of comparable entertainment would normally be $50.

• The Byrds contributed $5,000 to Lowell Presbyterian Church and gave used clothing

(cost of $1,200 and fair market value of $350) to the Salvation Army. All donations

are supported by receipts, and the clothing is in very good condition.

• In 2013, the Byrds received interest income of $2,750, which was reported on a Form

1099–INT from Second National Bank.

• Alice’s employer requires that all employees wear uniforms to work. During 2013,

Alice spent $450 on new uniforms and $225 on laundry charges.

• Bruce paid $400 for an annual subscription to the Journal of Franchise Management.

• Neither Alice’s nor Bruce’s employer reimburses for employee expenses.

• The Byrds do not keep the receipts for the sales taxes they paid and had no major

purchases subject to sales tax.

• Alice and Bruce paid no estimated Federal income tax. Neither Alice nor Bruce

wants to designate $3 to the Presidential Election Campaign Fund.

QUESTION:

Part 1—Tax Computation ( Do not use tax software !)
Compute net tax payable or refund due for Alice and Bruce Byrd for 2013. If they have
overpaid, they want the amount to be refunded to them. use tax forms for your
computations(Forms 1040 and 2106 and Schedules A and B.)

I only need help on Form 2106, both Alice and Bruce.

It would be nice if the solution is in a form structure

Explanation / Answer

Overview:

We explore possible differences in pay between men and women in Human Resources positions,

comparing in a variety of different manners.

Both uncontrolled pay -- pay that is calculated without adjusting for outside compensable factors

such as job title, years of experience, company size, etc. -- and controlled pay are examined. The

controlled pay takes into account compensable factors other than gender, and calculates pay on a

level playing field, answering the question "if everything except gender was exactly the same, what

would the pay be?".

Additionally, we explore differences in education, age, stress, and satisfaction.

Definitions:

Total Cash Compensation (TCC): TCC combines base annual salary or hourly wage, bonuses, profit

sharing, tips, commissions, and other forms of cash earnings, as applicable. For example, when

overtime is typical for a given job, TCC also includes overtime pay. It does not include equity (stock)

compensation, cash value of retirement benefits, or value of other non-cash benefits (e.g.,

healthcare).

Years of Experience: These are the number of years the respondents has spent in the field/career.

Therefore the years of experience will incorporate all applicable jobs in the field, not just the current

job.

Uncontrolled Median Pay (Male or Female) : The median pay is the national median (50th

Percentile) annual total cash compensation. Half the people doing the job earn more than the

median, while half earn less.

In each case, the median pay for men and women are examined separately. Variables such as years

of experience and education are not controlled for. This provides a picture of the differences in

wages earned by men and women in an absolute sense.

Uncontrolled Percent Difference between Female and Male Pay: This is a percentage that shows

the difference in pay between male and female median pay. It is calculated by dividing the

difference between male and female median pay by median female pay. For example, HR Director

has a female median pay of $75,800 and a male median pay of $90,900. The uncontrolled percent

difference is ($90,900 - $75,800)/$75,800 = 20%. This means that male HR Directors have a median

pay that is 20% higher than female HR Directors.

Controlled Male Median Pay: Using our unique database and analytical tools, we estimate the

controlled median pay by adjusting for outside compensable factors across gender. These factors

include years of experience, education, company size, etc.

Note: In order to control for outside factors, we start with the typical characteristics of a female

worker in a job, then adjust the characteristics of the typical man in the job to match those of the

average woman. The result is the median pay calculated for the average man if they had the exact

same breakdown of compensable factors as the average woman.

Controlled Percent Difference between Female and Male Pay: This is the percent difference in

female median pay and controlled male median pay. It is a more accurate representation of pay

disparities by gender (if any exist) than comparing the uncontrolled median pay for men and

women.

The controlled percent difference is smaller than the uncontrolled percent difference in nearly every

case. This is because other factors outside of gender are affecting pay to inflate the male median pay

higher than it actually is when an apples-to-apples comparison is made. For example, a greater

percentage of men hold MBAs or other Masters degrees than women, which translates into higher

pay. Other compensable factors such as years of experience and company size also play a prominent

role.

Percent Male/Female: This is the percentage of employees for a given job title that are either male

or female.

Job Title

HR Assistant

HR Administrator

HR Generalist

All HR

HR Manager

HR Director

HR Vice President

Uncontrolled

Median Female Median Male

Pay

$32,600

$33,600

$39,500

$40,200

$45,700

$46,100

$48,200

$61,300

$56,100

$64,200

$75,800

$90,900

$132,000

$157,000

Uncontrolled

Percent

Difference

between Female Controlled Male

and Male Pay

Median Pay

$33,300

$39,600

$47,000

27%

$50,300

14%

$59,500

20%

$79,500

19%

$142,000

Controlled Percent

Median Median Median

Median Male

Difference

Female Years Years

between Female Percent Percent Female Male

and Male Pay

Female Male

Age

Experience

89%

11%

90%

10%

86%

14%

83%

17%

82%

18%

76%

24%

68%

32%

Uncontrolled Pay by Gender

$160,000

$140,000

$120,000

Annual Median Pay

$100,000

$80,000

$60,000

$40,000

$20,000

Uncontrolled

Female Median

Pay

Uncontrolled Male

Median Pay

Controlled Pay by Gender

$160,000

$140,000

$120,000

Annual Median Pay

$100,000

$80,000

$60,000

$40,000

$20,000

Uncontrolled

Female Median

Pay

Calculated Male

Median Pay

Degree Level

Associate Degree

Bachelor's Degree

M.B.A.

Master's Degree (non-M.B.A)

Controlled Percent

Uncontrolled Female

Uncontrolled Male Uncontrolled Percent Difference

Difference between

Median Pay

between Female and Male Pay

Controlled Male Median Pay Female and Male Pay

$40,500

$47,000

16%

$41,600

$48,500

$56,300

16%

$50,600

$60,700

$76,600

26%

$63,800

$59,700

$76,800

29%

$61,400

Percentage of Females Percentage of Males

with Given Education with Given Education

Level

10%

63%

59%

10%

17%

13%

17%

Uncontrolled Pay by Gender and Degree

Controlled Pay by Gender and Degree

$90,000

$80,000

$70,000

Annual Median Pay

$60,000

$50,000

$40,000

$30,000

$20,000

$10,000

Uncontrolled Female

Median Pay

Uncontrolled Male

Median Pay

$70,000

$60,000

$50,000

Annual Median Pay

$40,000

$30,000

$20,000

$10,000

Uncontrolled Female

Median Pay

Calculated Male Median

Pay

Associate

Degree

Bachelor's

Degree

M.B.A.

Master's

Degree (non-

M.B.A)

Associate

Degree

Bachelor's

Degree

M.B.A.

Master's

Degree (non-

M.B.A)

Points of Interest and Explanations:

1. The percentage difference between uncontrolled pay is again much larger than the difference in controlled pay.

2. Similarly, there still does appear to be a small difference in pay between men and women, even after controlling for outside variables.

3. A greater percentage of men in the Human Resources field have Masters degrees than women, who are more likely to have either a Bachelor's or Associate

degree.

4. These values are across All HR titles, as defined in the Pay by Job Title sheet.

Major

Psychology

Human Resources Management

Business Administration

Industrial & Labor Relations

Uncontrolled Female

Median Pay

$49,000

$50,200

$50,600

$62,800

Uncontrolled Percent

Uncontrolled Male Difference between

Median Pay

Female and Male Pay

$56,900

$61,600

$67,100

$89,300

Controlled Male Median

Pay

$48,400

$52,800

$53,200

$65,400

16%

23%

33%

42%

Controlled Percent

Difference between

Female and Male Pay

-1%

Uncontrolled Pay by Gender and Major

$100,000

$90,000

$80,000

$70,000

Annual Median Pay

$60,000

$50,000

$40,000

$30,000

$20,000

$10,000

Uncontrolled Female

Median Pay

Uncontrolled Male

Median Pay

Psychology

Human Resources

Business

Industrial & Labor

Management

Administration

Relations

Points of Interest and Explanations:

1. Four of the top majors for Human Resources

professionals are examined here.

2. The uncontrolled differences in pay are very large

when examined by major, with a difference of 42%

for Industrial and Labor Relations majors.

3. The differences in pay appear to be largely due

factors other than major, however, as the controlled

percent differences were much smaller.

4. These values are across All HR titles, as defined in

the Pay by Job Title sheet.

Controlled Pay by Gender and Major

$70,000

$60,000

$50,000

Annual Median Pay

$40,000

$30,000

$20,000

$10,000

Uncontrolled Female

Median Pay

Calculated Male Median

Pay

Psychology

Human Resources

Management

Business

Administration

Industrial & Labor

Relations

Metropolitan Statistical Area

New York-Northern New Jersey-Long Island, NY-NJ-PA

Los Angeles-Long Beach-Santa Ana, CA

Chicago-Naperville-Joliet, IL-IN-WI

Dallas-Fort Worth-Arlington, TX

Philadelphia-Camden-Wilmington, PA-NJ-DE-MD

Houston-Sugar Land-Baytown, TX

Washington-Arlington-Alexandria, DC-VA-MD-WV

Miami-Fort Lauderdale-Pompano Beach, FL

Atlanta-Sandy Springs-Marietta, GA

Boston-Cambridge-Quincy, MA-NH

Uncontrolled

Uncontrolled Percent

Female Median

Male Median Difference between

Pay

Female and Male Pay

Pay

$59,400

$66,700

$55,100

$61,900

$51,800

$53,500

$48,900

$76,300

$52,600

$64,400

$50,300

$69,700

$56,800

$77,800

$50,000

$60,000

$47,100

$62,500

$53,200

$60,300

Controlled Percent

Controlled Male Median Difference between

Pay

Female and Male Pay

$58,000

-2%

$57,500

$50,700

-2%

$51,600

$53,900

$54,500

$54,600

-4%

$55,500

$50,900

$52,900

-1%

12%

56%

22%

39%

37%

20%

33%

13%

Uncontrolled Pay by Gender and MSA

Boston-Cambridge-Quincy, MA-NH

Atlanta-Sandy Springs-Marietta, GA

Miami-Fort Lauderdale-Pompano Beach, FL

Washington-Arlington-Alexandria, DC-VA-MD-WV

Houston-Sugar Land-Baytown, TX

Philadelphia-Camden-Wilmington, PA-NJ-DE-MD

Uncontrolled Male Pay

Uncontrolled Female Pay

Dallas-Fort Worth-Arlington, TX

Chicago-Naperville-Joliet, IL-IN-WI

Los Angeles-Long Beach-Santa Ana, CA

New York-Northern New Jersey-Long Island, NY-NJ-PA

$10,000

$20,000

$30,000

$40,000

Annual Median Pay

$50,000

$60,000

$70,000

$80,000

$90,000

Controlled Pay by Gender and MSA

Boston-Cambridge-Quincy, MA-NH

Atlanta-Sandy Springs-Marietta, GA

Miami-Fort Lauderdale-Pompano Beach, FL

Washington-Arlington-Alexandria, DC-VA-MD-WV

Houston-Sugar Land-Baytown, TX

Philadelphia-Camden-Wilmington, PA-NJ-DE-MD

Calculated Male Pay

Uncontrolled Female Median Pay

Dallas-Fort Worth-Arlington, TX

Chicago-Naperville-Joliet, IL-IN-WI

Los Angeles-Long Beach-Santa Ana, CA

New York-Northern New Jersey-Long Island, NY-NJ-PA

$10,000

$20,000

$30,000

Annual Median Pay

$40,000

$50,000

$60,000

$70,000

Points of Interest and Explanations:

1. The Dallas-Ft. Worth-Arlington metropolitan statistical area has the largest uncontrolled difference in pay, with a difference of 56%, while Chicago has the lowest, with

a difference of only 3%.

2. After controlling for outside variables, New York, Chicago, Washington and Boston all show that women are being paid more than men, while in Houston, Miami and

Atlanta, the opposite is true.

3. These values are across All HR titles, as defined in the Pay by Job Title sheet.

Job Satisfaction Description

I hate my job

Dissatisfied

A little satisfied

Fairly satisfied

Extremely satisfied

Uncontrolled Female Uncontrolled Male

Median Pay

$48,100

$44,800

$48,900

$54,600

$48,600

$55,800

$51,600

$64,700

$54,200

$76,600

Uncontrolled Pay by Gender and Job

Satisfaction

$80,000

$75,000

$70,000

Annual Median Pay

$65,000

$60,000

$55,000

$50,000

$45,000

$40,000

$35,000

$30,000

Uncontrolled Female

Median Pay

Uncontrolled Male Median

Pay

Points of Interest and Explanations:

1. First of all, it should be explicitly noted that this is uncontrolled pay, which is why the

median pay for men appears higher than women in all cases but one.

2. Pay is much more strongly linked with job satisfaction for men than it is for women,

who do not appear to be nearly as concerned with pay when determining how much

they enjoy their job.

3. Stress correlates in a similar manner for both genders: the more stressful the job, the

higher median pay.

4. These values are across All HR titles, as defined in the Pay by Job Title sheet.

Job Stress Description

My job is relaxing

Not stressful

A little stressful

Fairly stressful

Extremely stressful

Uncontrolled Female Uncontrolled Male

Median Pay

$35,400

$45,800

$42,700

$53,500

$47,800

$59,400

$52,100

$67,800

$57,700

$71,900

2012

Uncontrolled Pay by Gender and Job

Stress

$80,000

$75,000

$70,000

Annual Median Pay

$65,000

$60,000

$55,000

$50,000

$45,000

$40,000

$35,000

$30,000

Uncontrolled Female

Median Pay

Uncontrolled Male

Median Pay

Uncontrolled Female Uncontrolled Male

Median Pay

$32,800

$34,500

$40,500

$42,400

$46,600

$54,900

$51,800

$68,900

$55,400

$74,500

$55,100

$80,000

Uncontrolled Percent

Controlled Percent

Controlled Male Median Difference between

Difference between

Female and Male Pay Pay

Female and Male Pay

$33,600

$40,900

18%

$48,400

33%

$55,600

34%

$58,600

45%

$58,500

2012

Uncontrolled Pay by Gender and Age

$90,000

$80,000

$70,000

$60,000

Annual Median Pay

$50,000

$40,000

$30,000

$20,000

$10,000

Uncontrolled Female Median Pay

Uncontrolled Male Median Pay

18 to 24 25 to 29 30 to 34 35 to 39 40 to 44 45 to 49

Controlled Pay by Gender and Age

Points of Interest and Explanations:

1. Wages are examined here for 6 different

age groups, for both men and women.

2. For all age groups, men earn more than

women even after controlling for other

factors, although the gap in wages is smaller

than it would appear without these controls.

3. After controlling for outside factors, neither

gender sees a significant increase in pay after

the age of 40. Although uncontrolled pay rises

for men still, this is likely due to differences in

job title, as opposed to men being paid more

for doing the exact same job.

4. Controlled pay differences are also largest

at older ages. One possible explanation for

this is that pay inequities by gender used to be

more prevalent than they are today.

5. These values are across All HR titles, as

defined in the Pay by Job Title sheet.

$70,000

$60,000

$50,000

Annual Median Pay

$40,000

$30,000

$20,000

$10,000

Uncontrolled Female Median Pay

Calculated Male Median Pay

18 to 24

25 to 29

30 to 34

35 to 39

40 to 44

45 to 49

Industry

Business Operation Support Services

Health Care and Social Assistance

Accommodation and Food Services

Transportation and Warehousing

Educational Services

Public Administration

Retail Trade

Information

Professional, Scientific, and Technical Services

Finance and Insurance

Wholesale Trade

Construction

Manufacturing

Uncontrolled Median

Female Pay

$42,500

$43,200

$47,800

$45,000

$49,300

$48,300

$48,700

$54,300

$52,400

$49,300

$48,900

$49,000

Uncontrolled Uncontrolled Percent

Controlled Percent

Median Male Difference between Female

Controlled Male Median Difference between

Pay

and Male Pay

Pay

Female and Male Pay

$47,700

12%

$44,800

$54,100

25%

$43,900

$55,200

15%

$50,100

$58,800

31%

$46,500

$59,700

21%

$50,100

$60,700

26%

$50,100

$61,500

26%

$52,900

$62,700

15%

$56,500

$63,700

22%

$54,000

$67,300

28%

$54,400

$67,800

38%

$53,800

$69,500

42%

$53,400

$71,400

46%

$53,600

Percent Percent

Female Male

81%

19%

86%

14%

82%

18%

81%

19%

83%

17%

75%

25%

83%

17%

83%

17%

86%

14%

85%

15%

83%

17%

82%

18%

82%

18%

Uncontrolled Pay by Gender and Industry

Manufacturing

Construction

Wholesale Trade

Finance and Insurance

Professional, Scientific, and Technical Services

Information

Retail Trade

Public Administration

Educational Services

Uncontrolled Median

Male Pay

Uncontrolled Female

Median Pay

Transportation and Warehousing

Accommodation and Food Services

Health Care and Social Assistance

Business Operation Support Services

$10,000

$20,000

$30,000

$40,000

Annual Median Pay

$50,000

$60,000

$70,000

$80,000

Controlled Pay by Gender and Industry

Manufacturing

Construction

Wholesale Trade

Finance and Insurance

Professional, Scientific, and Technical Services

Information

Retail Trade

Public Administration

Educational Services

Calculated Male Median

Pay

Uncontrolled Female

Median pay

Transportation and Warehousing

Accommodation and Food Services

Health Care and Social Assistance

Business Operation Support Services

$10,000

$20,000

$30,000

Annual Median Pay

$40,000

$50,000

$60,000

Points of Interest and Explanations:

1. The industries used here are those defined by the US Census North American Industry Classification System (http://www.census.gov/eos/www/naics/index.html).

2. Manufacturing, construction, and wholesale trade are the industries with the highest median pay for HR Professionals, while accommodation and food services,

healthcare and social assistance, and business operation support services pay the lowest.

3. Controlled differences in pay are again smaller across the board than uncontrolled differences, although Manufacturing, Construction, Wholesale, and Retail trade

all see a relatively large controlled difference of 9%.

4. The percentage of men and women in HR is similar for all industries, with a workforce that is between 81% and 86% female. Public administration, on the other

hand, has a 75/25 female/male split.

5. These values are across All HR titles, as defined in the Pay by Job Title sheet.

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