DrNoCompleted the spreadsheet for this Job.
Candyis an employee of Jimmy, Inc. She receives a salary of $108,000. The company provides medical insurance that would cost Candy $750 per month and matches Candy’s $500 per month contribution to the company’s Section 401(k) plan.
Candy ‘s employer pays 3% of net income for unemployment insurance and 4% of net income for industrial accident insurance (i.e., workers’ compensation).
Assume Candy’s other income equals her other deductions, so the income from the business is her taxable income.
Assume Candy’s federal income tax is a flat tax of 18% of taxable income.
Calculate Candy’s after-tax cash flow from this job. Ignore other income and deductions, including the standard deduction and the exemption deduction. Include the unemployment and workers comp at full value.
Complete the Spreadsheet for Candy [5 Points Possible]
Candy has income and deductions as a consultant for 2015 that are summarized as follows:
Gross income from sole proprietorship $156,500
Cash operating expenses for sole proprietorship 30,400
Candy pays for her own medical insurance coverage at $750 per month and places $1,000 per month in a personal retirement account.
Candy pays 3% of net income for unemployment insurance and 4% of net income for industrial accident insurance. The former is not deductible; the latter is.
Assume Candy’s federal income tax is a flat tax of 18% of taxable income.
Assume Candy’s other income equals her other deductions, so the income from the business is her taxable income. Also, note that a self-employed individual can deduct the cost of his or her medical coverage.
Calculate Candy’s after-tax income.
NOTE: The medical benefit value and the retirement account value are not included. You may add them, but since the benefit is the same as an employee and as an independent contractor, they are irrelevant.
From Accountancy 202: A cost is irrelevant to a decision if it is the same for each of the situations being con
Employee
Salary $108,000
Retirement $6,000
Net taxable $102,000
TAX $18,360
Cash flow
Net from above $102,000
Social Security tax $(6,696)
Medicare tax $(1,566)
Income tax $(18,360)
Unemployment insurance $3,240
Workers’ Compensation $4,320
$75,378
Independent Contractor
Gross $156,500
Operating expenses $(30,400)
Net income $126,100
Calculate SETax
Multiply by 92.35%
SSTax
Medicare tax
Total SETax
Net income
One-half of SETax
Medical insurance
Retirement
Taxable
Tax
Cash flow
Net from above
Self employment tax
Medical & retiremtnt
Income tax