CLIENT \#10: KAYLA \& CHRIS Kayla and Chris are married with three children, the oldest of which is 14. They live and work in Texas. Kayla is a teacher. She pays $4767.02 in Social Security tax. Chris is a self-employed contractor; he pays $2567.04 in Medicare tax. 1. Use this information to calculate the following... a. Kayla's real salary and Medicare tax. b. Chris' real salary and Social Security tax. Kayla contributes 15% of her salary to a tax-deferred annuity (retirement plan) through her school district. Chris has no retirement plan option since he's self-employed. 2. Use this information to calculate Kayla's unadjusted (box \#1) taxable salary for income tax purposes. Kayla and Chris bought their home for $379,000, and the couple did what they needed to do to avoid paying PMI. Their initial mortgage was a 30-year, fixed-rate mortgage with an APR of 6.25%. Seven years later, the couple refinanced to a new, 30-year mortgage with an APR of 4.45%. They paid $7,000 in closing costs on the refinance; the $7,000 was added to the amount of their new loan. (There is no down payment on a refinance). Kayla and Chris have had their current, refinanced mortgage for 6 years. 3. Use this information to calculate the amount of mortgage interest Kayla \& Chris paid this past year. Annual property tax in Denton, TX, where the couple lives, is 2.75% of a home's assessed value. The couple's home is assessed at $458,125. 4. Use this information to calculate the couple's property tax paid. Kayla is still repaying her student loans. She has a $82,000 UNSUBSIDIZED loan she is repaying with extended repayment at 3.74% APR. This was year 13 of her loan repayment. 5. Use this information to calculate Kayla's student loan interest repaid for the year. To calculate the amount of money received in dividends for a given stock, multiply the stock's current share price by the dividend yield percentage (as a decimal, of course). Then multiply this answer by the number of shares owned, rounding to the nearest cent. Kayla and Chris own the following stocks. Digital Realty Trust (DLR): 200 shares; 2.92\% dividend yield; $159.03 current share price Altria Group (MO): 450 shares; 7.28% dividend yield; $49.48 current share price AbbVie Inc. (ABBV): 125 shares; 4.12\% dividend yield; $136.97 current share price Suncor Energy (SU): 700 shares; 4.72% dividend yield; $27.98 current share price 6. Use this information to calculate the total dividend income Kayla and Chris received. Since Kayla is a teacher, she receives an automatic $250 deduction for purposes of Federal income tax. Chris gets to deduct $0.625 per mile of work-related travel. He is claiming 692 such miles. Additionally, the couple donated $900 to the ASPCA during the year, because they love animals. Lastly, the couple eamed $39.66 in bank interest. 7. Using this and all previous information, calculate Kayla and Chris' taxable salary for Federal income tax, as well as their federal income tax due. During the year, Kayla had $34,119.20 withheld from her pay for federal income tax. Because Chris is selfemployed, he had no tax withheld (which explains Kayla's huge withholdings). Use this information to calculate the following... 8. Kayla and Chris' Federal refund received or tax owed. Don't forget any tax credits they may have. 9. Keeping in mind that Texas has no state income tax, calculate Kayla \& Chris' effective tax rate, correct to the nearest hundredth of a percent. 10. The following are Kayla \& Chris' debts. Use them, as well as the couple's total real salary (before adjustments and deductions) to calculate a D/I ratio, correct to the nearest hundredth of a percent. Mortgage: From previous questions Student loan: From previous questions Property tax: From question #4 (the number you calculated is annual number) Cell phones: $225/ month TV/Internet: $135/ month Electricity: $110 month Home Heating Oil: $920/ year Tuition for children: $12,820 /year in total Water: $88/ quarter Sewer: $245/ semiannually Credit card minimums: $45/ month Car insurance: $1,150/ semiannually Homeowner's insurance: $435/ semiannually Car loans (2): One is for $16,980 at 1.35% APR for 5 years The other is for $42,350 at 0.49% APR for 6 years
