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Chapter 4 w Solutions

Chapter 4 w Solutions - 1 Burkett—Tax | —Chapter4 I...

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Unformatted text preview: 1 / Burkett—Tax | —Chapter4 I Scholarship Example Jay received an athletic scholarship to Small State University. Under the scholarship agreement, he received tuition ($4,500), books ($400), and room and board ($5,000). Exclusion? r TM 52 T99N. gmlé‘f—W “+8713 + “to? '3“ @800 } M Gross Income? 20% a 30W 7"" $137000 _._—--—'-'_— How is J ay’s standard deduction affected? (Chapter 1) $3,000 0? 63". CAN @«3 mgfi’lfifi ”A? flew-ea Era/Coma" 33m! CLQMPVVJZM,Q (mgflSa Q???) Qfiduarflokf Burkett — Tax I — Chapter 4 Flexible Benefit Plan Aria works for Bond Corp. which allows her to contribute a maximum of $5,000 a year to a medical reimbursement plan. How does the following affect the income reported on her W-2? Her salary is $ 62,000 ‘ Aria contributes $2,000 / .2 ooh ‘ - ' b. 00 O I Net wage reported on her W-2 - Cgfl How do the following affect her Income? Reimbursement for qualified medical expenses $1,800 “a What is the balance in her account at the end of the year? CoNT - 2.01:0 Res/\Mé £832) . 2 00 To Em QbkL-EQ (20 O) ”ODQLMCQ “5" Burkett — Tax | — Chapter 4 Disability/Flexible Benefit Plan Example ' Joe (25% MTR) has purchased a disability policy with after tax $ that will pay him a $500/month benefit if he becomes disabled. How much benefit would he have to purchase to receive an equivalent amount (ATE/After Tax Benefit) if he was to purchase disability coverage pre- tax through his companies flexible benefit plan? gsew / (I 22,3”) -_—__~__ (an? .EPQooF—‘fi I \L ”FA x Ag La SENco w—"i (9(9'7 TAuLG l§d7 (\(933 Ne» Amfim... 'W—N goo '___——_..____( Bu rkett — Tax | — Chapter 4 Health Savings Account (HSA) Aria works for Bond Corp. which has a high deductible health insurance plan (:$1,200). How do the following items affect her AGI? HSA Contributions By Bond Corp 55 500 ‘9 Aria makes the maximum contribution? Elg’ro (ZYYO 5 Maximum for single taxpayer $ 3 1 C50 For AGI Deduction ' 4‘5 253-03 How do the following affect her Income? Distribution for qualified medical expenses is $250 "9' Earnings on her account of $18 . «B What is the balance in her account at the end of the year? goo-e 2.,ny Ame» 253 2:2. as 7.4318 - How is this different than a flexible benefit plan? wee. Bower; :44 Area Ace? (342:. LoNq: “T? AQSAA Burkett — Tax I — Chapter 4 CD vs. Bond Example 'Joe (25% MTR) is considering investing in a 5% Richland County bond. What rate would he have to receive on a bank CD to have an equivalent after tax return? 3‘51 /6 "” .25”) :1. (0.10")? Pk“ 11 a. ‘ ‘11 "TA-wt (ere. genera/x! (a 6:) J2 ”TA—u C2: ZSZ _ \ (5702, Ne? eerum weer. “We! go; F" ...
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