Reference no: EM131129381

As indicated in the All About You on page 506, medical costs are substantial and rising. But will they be the most substantial expense over your lifetime? Not likely. Will it be housing or food? Again, not likely. The answer is in the Accounting Across the Organization box on page 498: taxes. On average, Americans work 74 days to afford their federal taxes. Companies, too, have large tax burdens. They look very hard at tax issues in deciding where to build their plants and where to locate their administrative headquarters.

Instructions

(a) Determine what your state income taxes are if your taxable income is $60,000 and you file as a single taxpayer in the state in which you live.

(b) Assume that you own a home worth $200,000 in your community and the tax rate is 2.1%. Compute the property taxes you would pay.

(c) Assume that the total gasoline bill for your automobile is $1,200 a year (300 gallons at $4 per gallon).What are the amounts of state and federal taxes that you pay on the $1,200?

(d) Assume that your purchases for the year total $9,000. Of this amount, $5,000 was for food and prescription drugs.What is the amount of sales tax you would pay on these purchases? (Many states do not levy a sales tax on food or prescription drugs. Does yours?)

(e) Determine what your Social Security taxes are if your income is $60,000.

(f) Determine what your federal income taxes are if your taxable income is $60,000 and you file as a single taxpayer.

(g) Determine your total taxes paid based on the above calculations, and determine the percentage of income that you would pay in taxes based on the following formula:Total taxes paid ÷ Total income.