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Assume you are offered a job with a salary of $41,000 and a bonus of 7.5% based on your performance during the year. If you
- Assume you are offered a job with a salary of $41,000 and a bonus of 7.5% based on your performance during the year.
- If you receive your full bonus at the end of the year, what is your total (gross or before tax) pay for the year?
- Assume you are filing under single status. Using the income tax table provided below, answer the following questions.
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- What is your marginal tax rate? 22%
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- What is your average (effective) tax rate? First determine the actual tax withheld from your income. Use the income calculated in part 1.a.
- Calculate your take-home pay using the pay in part 1.a. and the taxes calculated in part 1.b.ii. (ignore employment taxes)
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Which is the relevant tax rate (marginal or average) as you consider whether or not you should work a second job to help you pay off your student loans more quickly? Why?
- Your employer offers a 401k that you can invest in as an employee of the firm. If you put in 3% of your pre-tax income (listed in question 1.a.), your employer will match 3%. Include the bonus in your total income.
- Assuming you put in the full 3% during your first year of employment, how much will your take home pay be reduced? In other words, what is the difference between your take-home pay without the 401k contribution (from part 1.b.iv.) and your take-home pay after a 401k contribution?
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- If you contribute the 3% to your 401k and your employer matches, how much will you have saved in total in your 401K account for the year (counting your employer contribution and your contribution)?
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