You just landed a job that pays you $85,000 but you also receive free tuition fo

Question

You just landed a job that pays you $85,000 but you also receive free tuition for your 3 children. The tuition is $47,000.00 a year and it is tax exempt. If you are in the 28% tax bracket and you utilize this benefit for all 2 of your children for the 4 years they are in college. What is the value of this benefit? You just landed a job that pays you $85,000 but you also receive free tuition for your 3 children. The tuition is $47,000.00 a year and it is tax exempt. If you are in the 28% tax bracket and you utilize this benefit for all 2 of your children for the 4 years they are in college. What is the value of this benefit?

Explanation / Answer

The first sentence says 3 children and second sentence says the benefit is utilized for all 2 children. Assuming 2 children.

Tuition per children = $47,000

Tutition for 2 children = $94,000

This value is tax exempt. Every year you save 28% tax on this value. Hence , total value of benefit = 4 * 28% * $94,000 = $105,280

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