Brett Ziggler has just finished his bachelor痴 degree in accounting. He would like to return to school part-time to obtain a master痴 degree in accounting so that he can sit for the CPA certification exam. In the meantime, he has just begun working for PricewaterhouseCoopers (PwC), as a transactions service representative making $40,000 per year. In one month Brett will begin taking advantage of the firm痴 401K plan and intends to deposit 2% of his yearly income into this account. Aleysia Ziggler is a wedding planner and currently works for firm making $45,000 per year without benefits. Aleysia would like to open her own event planning business focusing on weddings and special occasions. Ideally Aleysia would like to work from home but she worries that the apartment the family has been renting will not provide a stable enough office for her business. Aleysia and Brett have considered purchasing a home but they do not want to spend more money on their housing costs each month. The couple already spends $1500 each month on rent and the average home in their area is $280,000 and mortgage interest rates are around 6.25%. Brett and Aleysia decided 3 years ago to start saving for their children痴 college education and weddings. The couple opened a savings account which returns 2.3% interest. They have decided to set aside $40 per month in the account. Including their opening deposit and their monthly contributions; the account now has $4000. Brett and Aleysia have been donating 3% of their income to charities for the past 4 years. The couple feels that the donations are their way of supporting the community and worthy causes. The family also volunteers for a charity organization, 10 miles from their home, once a month to assist in teaching their children this value.
Brett and Aleysia have a small investment portfolio worth $4700 from which they receive $30 annually in the form of dividends. The couple received this portfolio as a wedding gift but has not made any changes to it. Brett and Aleysia have a lot of decisions to make over the next few months and they would like to make the best decisions. They have asked for your help in providing them with a tax and financial planning strategy.
1.What is the Ziggler family痴 gross income?
2.What is the Ziggler family痴 taxable income?
3.What kind(s) of deductions do the Zigglers qualify for at this point?
4.How could the Zigglers legally increase their tax deductions?
5.Should the Zigglers consider purchasing a home? Why?
6.How should the Zigglers approach tax planning if Aleysia opens a business?
7.If the Zigglers could sell a portion of their stock portfolio, and replace that portion with a higher yielding stock which changed their dividend payments to $1,000 per year, what would you advise them to do? Why?
8.If Brett left his job to return to school and Aleysia kept her current position, how would your advice to the Zigglers change?
9.If Aleysia痴 income grew to twice its current rate, how would the Ziggler痴 taxes change? If this occurred, how would your advice to the Zigglers change?
10.Summarize your tax-planning strategy for the Zigglers and provide at least five tax-planning tips.
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