Richard and Monica estimated they would have adjusted gross income of $108,000 in the current year and would have exemptions of $7,900 and deductions of $25,000. Their average combined federal and state tax bracket was 33 percent.
Questions
1. Compute their projected taxes for the year.
2. Richard wanted to know if he should take a $10,000 tax deduction this year or wait until next year to do so. He was inclined to do so now even though his average tax bracket would likely be 28 percent next year. What do you think he should do?
3. Monica wanted to know if they should place their savings into a qualified pension or save it personally. She said that Richard often had modest losses, not gains, each year. What is your recommendation?
4. Monica asked what tax-planning strategies you would recommend for them? Do so while completing the tax-planning section of the plan.