What could tawana do to reduce her family tax burden

Reference no: EM13905602

Tawana owns and operates a sole proprietorship and has a 40 percent marginal tax rate. She provides her son, Jonathon, $8,000 a year for college expenses. Jonathon works as a pizza delivery person every fall and has a marginal tax rate of 15 percent.

a) What could Tawana do to reduce her family tax burden?

b) How much pretax income does it currently take Tawana to generate the $8,000 after-taxes given to Jonathon?

c) If Jonathon worked for his mother's sole proprietorship, what salary would she have to pay him to generate $8,000 after taxes (ignoring any Social Security, Medicare, or self-employment tax issues)?

d) How much money would this strategy save?

Reference no: EM13905602

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