FIN-210 Topic 2 Chapter 4 Financial Planning Problems

Chapter 4 Financial Planning Problems

Complete Problems 2, 5, 7, 10, 11, and 14 in Chapter 4 of the textbook.

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2 FICA Contributions. Brian makes $27,000 per year. How much can he expect to contribute to FICA taxes in 2012? How much will his employer contribute?

5 Capital Gains Tax. Stuart is in the 25% tax bracket. Recently, he sold stock that he had held longer than a year for a gain of $20,000. How much tax will Stuart pay on this gain?

7 Deductions. Emily and Paul are married and filed a joint return for 2012. The standard deduction for their filing status is $11,900. They have the following itemized deductions:

Medical bills above the 7.5% limit           $400

Mortgage interest                                        3,500

State income taxes                                      1,500

Charitable contributions                           250

Should Emily and Paul itemize their deductions or use the standard deduction?

10 Taxable Income. Nick is married and has three children in college. His wife is a homemaker. Nick has an adjusted gross income of $37,400. If Nick’s standard deduction is $11,900, his itemized deductions are $12,200, and he gets an exemption of $3,800 for himself, his wife, and each dependent, what is his taxable income?

11 Change in Taxable Income. Using the information in problem 10, if Nick’s itemized deductions increase by $2,000, how will his taxable income be impacted?

14 Itemized Deductions. Tracy is single and had an adjusted gross income of $37,000 in 2012. Tracy also has the following items:

Unreimbursed medical expenses             $3,000

State income tax                                          1,850

Interest expense (first mortgage)             3,040

Interest expense (second mortgage)        1,200

Real estate tax                                              700

Interest expense—car loan                       550

Interest expense—credit card                    125

Gifts to charity                                             300

How much may Tracy claim as itemized deductions?

Course: FIN-210 Personal Finance
School: Grand Canyon University

  • 05/05/2021
  • 35
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