Week10 Discussion.docx - 4E 1 How should you choose between taking the standard deduction and itemizing deductions To choose between standard and

Week10 Discussion.docx - 4E 1 How should you choose between...

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4E 1.How should you choose between taking the standard deduction and itemizing deductions?To choose between standard and itemized deductions you should know your total deductible expenditures vs the standard deduction amount. Then the choose should be obvious just go with whichever one gives you a better deduction. 2. Explain how you can benefit from a tax-deferred savings plan. When you contribute to a tax-deferred savings plan you do not pay taxes on the money that goes into it, which allows you to add more to it and allows it to grow faster. You then pay taxes on the money when you take it out. 3. In terms of federal income taxes, Susan is in the 35% tax bracket and her friend Allison is in the 10% tax bracket. They each itemize their deductions, and they each donate to charity. Compare their true costs for a charitable donation of $5,000. Allison->5000 x 10% = 500 true cost 5000 – 500 = 4500 Susan->5000 x 35% = 1750 true cost-> 5000 – 1750 = 3200 4. James and Laurie are married filing jointly with a taxable income of $92,730. They are also entitled to a children’s tax credit of $2,000. Calculate the federal income tax owed in their
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