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Tax brackets have changed; an employee who made between $38,000 - $82,500 single filing or between...

Tax brackets have changed; an employee who made between $38,000 - $82,500 single filing or between $77,400 – $165,000 married joint filing was formally in the 25% tax bracket but are now in the 22% tax bracket for 2018- 2025.

Union and Corporate are negotiating contract terms. Assume that the union members are in the 22% marginal tax bracket and that all benefits are provided on a nondiscriminatory basis. Write a letter to the Union members explaining the tax consequences of the options discussed below.

The company would eliminate the $250 deductible on medical insurance benefits. Most employees incur more than $250 each year in medical expenses.
Employees would get an additional paid holiday with the same annual income (the same pay but less work).
An employee who did not need health insurance (because the employee’s spouse works and receives family coverage) would be allowed to receive the cash value of the coverage.
Review the current year tax form 1040 at IRS.gov and the year 2016 tax form 1040 in appendix B of our text; comment on whether or not the new standard deduction is implemented in this year’s 1040 form.

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Answer #1

As per 1040 form for 2018 there is standard deduction for single for $ 12000 and for married $ 24000.

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