after_tax_cost_compensation

after_tax_cost_compensation - 5,000 25,000 Health insurance...

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Source of income (a) (b) Wages 50,000 250,000 Compensation subject to FICA 50,000 250,000 Social security tax base - 2010 106,800 106,800 Compensation subject to SS tax 50,000 106,800 x Social security tax rate 6.2% 6.2% Social security tax 3,100 6,622 Compensation subject to Medicare tax 50,000 250,000 x Medicare tax rate 1.45% 1.45% Medicare tax 725 3,625 After-tax cost to corporation: Total FICA taxes 3,825 10,247 Wages 50,000 250,000 Before-tax cost of salary 53,825 260,247 (1- tax rate) 65% 65% After-tax cost of wages 34,986 169,160 Source of income (c) (d) After-tax cost of compensation (assume a 35% marginal corporate tax rate) (assume a 35% marginal corporate tax rate) Wages 50,000 250,000 10% contribution to 401(k) plan
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Unformatted text preview: 5,000 25,000 Health insurance premiums paid 10,000 10,000 Compensation subject to FICA 50,000 250,000 Social security tax base - 2010 106,800 106,800 Compensation subject to SS tax 50,000 106,800 x Social security tax rate 6.2% 6.2% Social security tax 3,100 6,622 Compensation subject to Medicare tax 50,000 250,000 x Medicare tax rate 1.45% 1.45% Medicare tax 725 3,625 After-tax cost to corporation: Total FICA taxes 3,825 10,247 Wages 50,000 250,000 10% contribution to 401(k) plan 5,000 25,000 Health insurance premiums paid 10,000 10,000 Before-tax cost of salary 68,825 295,247 (1- tax rate) 65% 65% After-tax cost of wages 44,736 191,910...
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This note was uploaded on 09/09/2011 for the course TAX 6845 taught by Professor Kelliher,c during the Fall '08 term at University of Central Florida.

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