Ava and her husband, Leo, file a joint return and are in the 24% Federal income tax bracket in 2020. Avas salary is $91,800. Her employer offers a child and dependent care reimbursement plan that allows up to $5,850 of qualifying expenses to be reimbursed in exchange for a $5,850 reduction in the employee's salary. Because Ava and Leo have two minor children requiring child care that costs $6,435 each year, Ava is wondering if she should sign up for the program instead of taking advantage of the credit for child and dependent care expenses. Analyze the effect of the two alternatives. Assume a FICA tax rate of 7.65%

A) If Ava and Leo take advantage of the plan, they (would/would not) save income taxes because the reimbursement of child care expenses is (Included in/excluded from) gross income. The (additional tax savings/additional taxes) associated with participating in the plan would be $ (dollar amount?). In addition, Ava will save $(dollar amount?) of FICA taxes due to the reduction in salary.

Alternatively, if Ava does not take advantage of the plan, their child and dependent care tax credit will be $(dollar amount?). Therefore Ava and Leo's income taxes will be $(dollar amount) if they do not participate in the plan.

b. Assume, instead, that Avas salary was $30,000 and Ava and Leo's AGI is $23,500 and they are in the 10% tax bracket.

The (additional tax savings/additional taxes) associated with participating in the plan would be $(dollar amount?). In addition, Ava will save $(dollar amount?) of FICA taxes due to the reduction in salary.

Alternatively, if Ava does not take advantage of the plan, their child and dependent care tax credit will be $(dollar amount?). Therefore Ava and Leo's income taxes will be $(dollar amount?) if they do not participate in the plan.