Valerie (age 52) & Stephen (age 55) McNamara have been married for 25 years and have one adult child, Tom, who is living on his own. They purchased their current home 7 years ago for $550,000. Valerie & Stephen file joint tax returns. The table below summarizes their financial data for tax purposes. Use this information when you are answering the questions that follow. Amount $100,000 $120,000 $22,700 $11,750 $15,683 $1,800 Tax Item Stephen's Eamings Valerie's Earnings Federal Tax Withholdings State Income Tax Withholdings FICA & M/C Savings Account Interest (2.5% per year) State Refund from Prior Year Home Mortgage Interest Paid (original mortgage on home valued at 500,000.) Real Estate Taxes Paid Charitable Contributions Unreimbursed Medical Expenses Stock Ownership: Union Motor Company (purchased 9 months ago & which they still hold) Whole Life Insurance Policy $1,200 $12,500 $16,500 $1,000 $2.800 Current Value: $4,000 Cost basis: $10,000 Face Value: $100,000 Cash Value: $8,800 Owner Stephen Beneficiary: Valerie Insured: Stephen Policy Dividend: $300 The Meltemares itemized deductions for their federal return last year. Currently, neither Valerie nor Stephen has access to a qualified retirement plan through their work and they have not funded IRAs up to this point in time. They have access to a Section 125 flexible spending account through Valerie's employer. To date, they have not funded the account Open enrollment is coming up and lasts for the next 30 days. For purposes of solving this case, use the tax information shown below. APPENDD INCOME TAX RATES SCHEDULES (2018) SINGLE Taxable income $0-$9,525 $9,526 - 38,700 38,701 - 82,500 82,501 - 157,500 157,501 - 200 200,201 - 500,000 500,501 + Standard Deduction Tax on Lower Amount $0 95250 4,453.50 14,089.50 32,089.50 45,689.50 150,689.50 12.000 Tax Rate on Excess 100% 12 0% 22.0% 24.0% 32.0% 35.0% 37.0% MARRIED FILING JOINTLY AND SURVIVING SPOUSES Taxable income $0-$19,050 19,051 - 77 400 77,401 - 165,000 165,001 - 315,000 315,001 - 400,000 400,001 - 600,000 600,001+ Standard Deduction Tax on Lower Amount $o 1905.00 8,907.00 28.179.00 64,179.00 91 379.00 161,379.00 12,000 Tax Rate on Excess 10.0% 12 09 22.0% 24.0% 32.0% 35.0% 37.0% HEAD OF HOUSEHOLD Taxable income 50 - $13,600 13601 - 51 800 51.801-82,500 82 501 - 157,500 152 501 - 200 000 200,201 - 500 000 500.001 - Standard Deduction Tax on Lower Amount $0 1.360.00 5,944.00 12 698 00 30 698.00 44 298.00 149,298 00 15.000 Tax Rate on Excess 10.0% 12.09 22.0 24 DN 32 ON 35 ON 37 ON 17. If a 401(k) plan were available to Valerie or Stephen, should they take advantage of it? If so, how much should they contribute? What effects would that have on their adjusted gross income? Explain your response. Show your computations. here! Valerie (age 52) & Stephen (age 55) McNamara have been married for 25 years and have one adult child, Tom, who is living on his own. They purchased their current home 7 years ago for $550,000. Valerie & Stephen file joint tax returns. The table below summarizes their financial data for tax purposes. Use this information when you are answering the questions that follow. Amount $100,000 $120,000 $22,700 $11,750 $15,683 $1,800 Tax Item Stephen's Eamings Valerie's Earnings Federal Tax Withholdings State Income Tax Withholdings FICA & M/C Savings Account Interest (2.5% per year) State Refund from Prior Year Home Mortgage Interest Paid (original mortgage on home valued at 500,000.) Real Estate Taxes Paid Charitable Contributions Unreimbursed Medical Expenses Stock Ownership: Union Motor Company (purchased 9 months ago & which they still hold) Whole Life Insurance Policy $1,200 $12,500 $16,500 $1,000 $2.800 Current Value: $4,000 Cost basis: $10,000 Face Value: $100,000 Cash Value: $8,800 Owner Stephen Beneficiary: Valerie Insured: Stephen Policy Dividend: $300 The Meltemares itemized deductions for their federal return last year. Currently, neither Valerie nor Stephen has access to a qualified retirement plan through their work and they have not funded IRAs up to this point in time. They have access to a Section 125 flexible spending account through Valerie's employer. To date, they have not funded the account Open enrollment is coming up and lasts for the next 30 days. For purposes of solving this case, use the tax information shown below. APPENDD INCOME TAX RATES SCHEDULES (2018) SINGLE Taxable income $0-$9,525 $9,526 - 38,700 38,701 - 82,500 82,501 - 157,500 157,501 - 200 200,201 - 500,000 500,501 + Standard Deduction Tax on Lower Amount $0 95250 4,453.50 14,089.50 32,089.50 45,689.50 150,689.50 12.000 Tax Rate on Excess 100% 12 0% 22.0% 24.0% 32.0% 35.0% 37.0% MARRIED FILING JOINTLY AND SURVIVING SPOUSES Taxable income $0-$19,050 19,051 - 77 400 77,401 - 165,000 165,001 - 315,000 315,001 - 400,000 400,001 - 600,000 600,001+ Standard Deduction Tax on Lower Amount $o 1905.00 8,907.00 28.179.00 64,179.00 91 379.00 161,379.00 12,000 Tax Rate on Excess 10.0% 12 09 22.0% 24.0% 32.0% 35.0% 37.0% HEAD OF HOUSEHOLD Taxable income 50 - $13,600 13601 - 51 800 51.801-82,500 82 501 - 157,500 152 501 - 200 000 200,201 - 500 000 500.001 - Standard Deduction Tax on Lower Amount $0 1.360.00 5,944.00 12 698 00 30 698.00 44 298.00 149,298 00 15.000 Tax Rate on Excess 10.0% 12.09 22.0 24 DN 32 ON 35 ON 37 ON 17. If a 401(k) plan were available to Valerie or Stephen, should they take advantage of it? If so, how much should they contribute? What effects would that have on their adjusted gross income? Explain your response. Show your computations. here