Edmentum Financial Math Unit 10 Activity

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For Daniel’s new employer to withhold the correct amount of taxes from his paycheck, Daniel filled out a W-4 form on his first day at work, January 8, 2018.

Review his work, and select the mistake he made.

Daniel’s gross weekly pay is $882.96. When he gets his first paycheck, Daniel notices that payroll taxes have already been deducted from his pay. Payroll taxes include Social Security tax and Medicare tax. Use the table to complete the statement.

Select the correct answer from each drop-down menu.

Payroll Tax Rates
Social Security tax rate 6.20%
Medicare tax rate 1.45%
Total payroll taxes 7.65%

Using the single taxable income tax brackets for 2018, select the appropriate marginal tax rate for each individual.

Select the correct rates in the table.

Assume that Daniel’s taxable income after taking the standard deduction is $33,914. Which equations will Daniel need to use to calculate the amount of income tax on his taxable income, where x is the amount of taxable income that’s taxed at the corresponding marginal tax rate and y is the amount of taxes owed?

Recall that Daniel’s taxable income is $33,914. According to the single taxable income tax brackets for 2018, the amount of income tax that Daniel owes is

The purpose of filling out a W-4 is to make it easier for individuals to meet their tax liability by paying income taxes as they earn income. Paying anticipated taxes from each paycheck reduces the amount an individual owes when filing taxes and can even result in a tax refund. To guarantee or increase the refund, individuals sometimes claim fewer allowances (to have more income tax withheld) or request a specific additional amount to be withheld from each paycheck.

Daniel’s employer will automatically deduct taxes from Daniel’s pay using the information on the W-4 form that Daniel completed on his first day. From his W-4 form, Daniel's employer determined that $75 needs to be withheld from each of Daniel's weekly paychecks, totaling $3,900 for the year.

Compare Daniel’s tax liability from part B, question 3, with the total amount withheld from his check: $3,900 for the year. If Daniel wants a refund when he files his taxes, should he have filled out his W-4 differently? Explain your reasoning.

A state sales tax of 6% and a local sales tax of 1% are levied in Tampa, Florida. Suppose the price of a particular car in Tampa is $15,000, and an oil change at a certain auto center is $29.

Which statement is true about the total cost of the car and the oil change after sales tax has been calculated?

Celeste is planning to buy a new bedroom set. Because sales tax rates can vary from town to town, Celeste wants to compare the sales tax rates at two retail locations before making the purchase.

The price of the new bedroom set that Celeste wants to buy is $2,734. The sales tax rates in the two cities at the time of purchase are given in the table.

Considering Carlos’s dividends and capital gains, which statement is true?

Determine the nature of Carlos’s investments, and identify the tax rates for his capital gains and qualified dividends.

Recall that the tax owed will reduce Carlos’s net profit. Carlos’s real, after-tax ROI is
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