Part 1. Holly is an employee of Kazee, Inc. Her salary is $200,000 for 2014. The
ID: 2474588 • Letter: P
Question
Part 1. Holly is an employee of Kazee, Inc. Her salary is $200,000 for 2014. The employer pays one-half of her Medicare plus unemployement ($4,200) and worker's compensation (4% of compensation). Holly and Kazee Inc. each pay $5,000 in retirment. How much is Holly's after tax cash flow if she has a flat income tax rate of 20 percent?
a. $145,846
b. $150,846
c. $156,000
d.$161,000
Part 2: Which of the following can Holly not deduct or exclude?
a. Unemployment tax paid by Kazee, Inc
b. Worker's compensation paid by Kazee, Inc.
c. All $10,000 paid into retirment
d. None of the above
Explanation / Answer
1)Holly after tax cash flow =( $200,000 - 5000 )*(1-20%) = $156,000
2) b. Worker's compensation paid by Kazee, Inc.