Question
Melissa, who is 70 years old, is unmarried and has no dependents. Her annual income consists of a taxable pension of $17,000, $14,000 in Social
Melissa, who is 70 years old, is unmarried and has no dependents. Her annual income consists of a taxable pension of $17,000, $14,000 in Social Security benefits, and $3,000 of dividend income. She does not itemize her deductions. She is in the 15% marginal income tax bracket. She is considering getting a part-time job that would pay her $5,000 a year. The applicable two bases for Social Security computations for Melissa are $25,000 and $34,000.
a. What would be Melissa's after-tax income from the part-time job, considering Social Security and Medicare tax (use 7.65%) as well as Federal income tax on the earnings of $5,000? (Round your intermediate computations and final answer to the nearest dollar.)
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