Mr. N and Mr. R are employed by HD Inc., which provides its employees with free

Question

Mr. N and Mr. R are employed by HD Inc., which provides its employees with free parking. If the parking were not available, Mr. N would pay $350 a month to a city garage. Mr. R uses public transportation to commute. HD offers a complete family medical plan to its employees in which both Mr. N and Mr. R participate. Mr. N’s family consists of five people, while Mr. R is single. Consequently, Mr. N’s annual cost of comparable medical insurance would be $9,000, while R’s cost would be just $4,100.

a) Mr. N has a 28 percent marginal tax rate. How much additional salary would he have to earn to provide himself with parking and medical insurance? Calculate the additional taxable salary required to pay for parking and medical.

b) Mr. R has a 35 percent marginal tax rate. How much additional salary would he have to earn to provide himself with medical insurance?

Explanation / Answer

Question a. Parking Fees 350 Medical 9000 Total Expenses 9350 After Tax salary income must be 9350. Because the amount is deductible expenses, No Income tax need to be paid. Additional Before tax income required = 9350+0= $9,350. Answer: $9,350 Question b. Mr. R uses public transport. So he don’t have parking expenses. So, His additional before tax will be $4100.

Related Questions

Navigate

• Browse (All)
• Browse M
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.