JangyounJangyoun is a married taxpayer with a dependent 4-year-old daughter. His employer offers a cafeteria plan under which he can choose to receive cash or, alternatively, choose from certain fringe benefits. These benefits include health insurance that costs

$ 9 comma 000$9,000

and child care that costs

$ 2 comma 600$2,600.

Assume

JangyounJangyoun

is in the

3232%

tax bracket.Read the

requirements LOADING...

.

Requirement a. How much income tax will

JangyounJangyoun

save if he chooses to participate in the employer's health insurance plan? Assume that he does not have sufficient medical expenses to itemize his deductions.

Save Accounting Table...+Copy to Clipboard...+By participating in the plan, Jangyoun would save

$

.

Requirement b. Would you recommend that

JangyounJangyoun

participate in the employer's health insurance plan if his wife's employer already provides comparable health insurance coverage for the family?

A.

JangyounJangyoun

cannot participate in the employer's health insurance plan if the family already receives comparable health insurance coverage from his wife's employer.

B.

Probably not. Although there would still be a tax savings that is not sufficient reason to spend

$ 9 comma 000$9,000

on duplicate medical insurance coverage.

C.

Yes. Having more than one health insurance coverage per family always creates an overall tax savings for the taxpayer.

D.

No. The tax savings would never exceed the cost of a second medical insurance coverage.

Requirement c. Would you recommend that

JangyounJangyoun

participate in the employer-provided child care option if he has the alternative option of claiming a child care credit of

$$ 480$480?

Save Accounting Table...+Copy to Clipboard...+Participation in the employer-provided child care option would result in a tax saving of

Would you recommend that

JangyounJangyoun

participate in the employer-provided child care option if he has the alternative option of claiming a child care credit of

$$ 480$480?

A.

No, the tax saving resulting from participation in the employer-provided child care option is less than the savings from claiming a child care credit of

$ 480$480.

JangyounJangyoun

should not participate in the employer-provided child care option.

B.

Yes, the tax saving resulting from participation in the employer-provided child care option is greater than the savings from claiming a child care credit of

$ 480$480.

JangyounJangyoun

should participate in the employer-provided child care option.

C.

There is no difference between the tax savings resulting from participation in the employer-provided child care option and the