Question

2.

Rick, who is single, has been offered a position as a city landscape consultant. The position pays $128,600 in cash wages. Assume Rick has no dependents. Rick deducts the standard deduction instead of itemized deductions and he is not eligible for the qualified business income deduction. (Use the tax rate schedules.)

b-1. Suppose Rick receives a competing job offer of $123,000 in cash compensation and nontaxable (excluded) benefits worth $5,600. What is the amount of Rick’s after-tax compensation for the competing offer? (Round your intermediate calculations and final answer to the nearest whole dollar amount.)

	Description Amount (1) Gross income (2) For AGI deductions (3) Adjusted gross income $0 (4) Standard deduction (5) Taxable income $0 (6) Income tax liability    Total after-tax compensation

Answer 1

2
	Description	Amount
1	Gross income	$ 128,600
2	For AGI deductions	$           -
3	Adjusted gross income	$ 128,600
4	Standard deduction	$   12,000
5	Taxable income	$ 116,600
6	Income tax liability	$   22,274
	14089.5+(116600-82500)*24% = 22273.5
7	Total after-tax compensation	$   94,327
b-1
	Description	Amount
1	Gross income	$ 123,000
2	For AGI deductions	$           -
3	Adjusted gross income	$ 123,000
4	Standard deduction	$   12,000
5	Taxable income	$ 111,000
6	Income tax liability	$   20,930
	14089.5+(111000-82500)*24% = 20929.5
	Non Taxable Benefits	$     5,600
7	Total after-tax compensation	$   95,671
Note: Standard deduction for 2019 is $12,200
			Since the year is not mentioned the calculation is done as per 2018