Melissa, who is 70 years old, is unmarried and has no dependents. Her annual income consists of
Question:
Melissa, who is 70 years old, is unmarried and has no dependents. Her annual income consists of a taxable pension of $17,000, $14,000 in Social Security benefits, and $3,000 of dividend income. She does not itemize her deductions. She is in the 15% marginal income tax bracket. She is considering getting a part-time job that would pay her $5,000 a year.
a. What would be Melissa's after-tax income from the part-time job, considering Social Security and Medicare tax (7.65%) as well as Federal income tax on the earnings of $5,000?
b. What would be the effective tax rate (increase in tax/increase in income) on the additional income from the part-time job?
DividendA dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...
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a Melissa will be subject to a 15 income tax rate and 765 Social Security and Medicare tax rate on t...View the full answer
South Western Federal Taxation Individual Income Taxes 2017
ISBN: 9781305873988
40th Edition
Authors: William H. Hoffman, David M. Maloney, William A. Raabe, James C. Young, Nellen
