# Finance Essay

499 words - 2 pages

Finance
FIN 1103
Week 3 Individual Work

Perform Time Value Money Calculations

Assignment Instructions |
To complete this assignment: 1. Answer all of the questions below in the space provided. 2. Reflect on the information presented in this week’s lesson and provide an insightful response to each question writing no more than two paragraphs. |
Save and Submit to Dropbox |
1. Save your work as a Microsoft Word 2010 (.docx) file that includes your name, course code, and title in the file name. For example: JaneSmith_FIN1103_Week3.docx. 2. To submit your assignment, go to the Dropbox and click "Submit Assignment." 3. Click on the drop-down menu to select the Week 3: Individual Work basket in the Dropbox. |

Objective: Analyze the ...view middle of the document...

They both earn good salaries. They believe that they are paying too much in federal income taxes. The Johnsons’ total income last year included Harry’s salary of \$63,000 and Belinda’s salary of \$84,000. She contributed \$3000 to her 401 (k) for retirement. She earned \$400 in interest on savings and checking and \$3000 interest income from the trust that is taxed in the same way as interest income from checking and savings accounts. Harry contributed \$3000 into a traditional IRA. |
a. What is the Johnsons’ reportable gross income on their joint tax return? |
The Johnsons’ reportable gross income on joint tax return \$144,000.00 |
b. What is their adjusted gross income? |
The adjusted gross income is \$137,600.00 |
c. What is the total value of their exemptions? |
Their total value of their exemptions \$3000.00 |
d. How much is the standard deduction for the Johnsons? |
The standard deduction for the johnsons is\$ 32,000.00 |
e. The Johnsons are buying a home that has monthly mortgage payments of \$3000, or \$36,000 a year. Of this amount, \$32,800 goes for interest and real estate property taxes. The couple has a \$14,000 in other itemized deductions. Using these numbers and Table 4-2, calculate their taxable income and tax liability. |
The taxable income \$15,127 and tax liability is\$ 20,385 . |
f. Assuming they had a combined \$22,000 in federal income taxes withheld, how much of a refund will the Johnsons receive? |
Refund \$10,225.00 |
g. What is their marginal tax rate? |
There marginal tax rate 32% |
h. List three additional ways that the Johnsons might reduce their tax liability next year. |
Three additional ways that the johnsons might reduce their tax liability nontaxable income,substracting exclusions and exemptions. |

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