Explain how much taxable compensation is the equivalent

Assignment Help Financial Accounting

Reference no: EM13123837

Bluebird, Inc., does not provide its employees with any tax-exempt fringe benefits. The company is considering adopting a hospital and medical benefits insurance plan that will cost approximately $7,500 per employee. In order to adopt this plan, the company may have to reduce salaries and/or lower future salary increases. Bluebird is in the 35% (combined Federal and state rates) bracket. Bluebird is also responsible for matching the Social Security and Medicare taxes withheld on employees’ salaries. The benefits insurance plan will not be subject to the Social Security and Medicare taxes, and the company is not eligible for the small business credit for health insurance. The employees generally fall into three marginal tax rate groups: The company has asked you to assist in its financial planning for the benefits insurance plan by computing the following:
Income tax SSN & Medicare Tax Total
.15 .0765 .2265
.25 .0765 .3265
.35 .0145 .3645

a. Explain how much taxable compensation is the equivalent of $7,500 of exempt compensation for each of the three classes of employees?

Reference no: EM13123837

Questions Cloud

Create testable null statistical hypothesis : Generate a testable null statistical hypothesis and an alternative statistical hypothesis. Select an alpha level of .05, .01, or .001 and justify your choice.

Value common stock currently trading : A company acquires land by issuing 10,000 shares of its $10 par value common stock currently trading at $20 per share and the appraised value of the land is $250,000. We would record the land by:

Equations of lines through point : What is the equation of the vertical line through P? What is the equation of the horizontal line through P?

Give a rationale with your response : Create a situation or scenario in which it may be appropriate to recognize revenue as the productive activity takes place. State whether or not there are any other times appropriate for recognizing revenue. Give a rationale with your response.

Explain how much taxable compensation is the equivalent : Explain how much taxable compensation is the equivalent of $7,500 of exempt compensation for each of the three classes of employees?

Omegas charitable contributions deduction : What is Omega's charitable contributions deduction for the current year and its charitable contributions carryover to next year, if any?

Question regarding conic graph : Identify and sketch the graph of the conic described by the quadratic equation x^2 + 4xy + y^2 - 12 = 0. Do this by writing this equation in matrix form

Find probability for thirds and two thirds favor new policy : What is the probability that in your random sample of 50 students, between one thirds and two thirds favor the new policy?

Lines through mon-colinear points : Given three points, there is one line that can be drawn through them if the points are colinear. If the three points are noncolinear,there are three lines that can be drawn through pairs of points.

User Account

All Pages