excel

information for Sampsons Case 4 Excel

Dave and Sharon Sampson want to determine their taxes for this year. Their combined income will be $65,000 for the entire year. They did not make any individual retirement account (IRA) contributions. The Sampsons are filing jointly.

Help the Sampsons estimate their Federal Income Contributions Act (FICA) tax, which consists of Social Security and Medicare taxes. For 2018, the FICA tax rate is 7.65% for annual incomes less than $128,400.

Gross Income $                  

FICA Tax Rate x                  %

FICA Tax $                  

The Sampsons will use the standard deduction of $24,000 rather than itemize their deductions. Help the Sampsons estimate their taxable income by filling in the following worksheet.

Gross Income $                  

Individual Retirement Account (IRA) Contribution $                  

Adjusted Gross Income $                  

Standard Deduction $                  

Taxable Income $                  

What is the Sampsons’ marginal tax rate?

                                                                                   

Help the Sampsons determine their personal income tax by accounting for the child tax credits. The tax credit is $2,000 for each of their two children.

                                                                                   

Information for Sampsons Case 5 Excel

Recall that the Sampsons would like to save a total of $1,000 per month. They notice that their local bank offers the certificate of deposit (CD) rates listed in the following table; they now need to determine if they should invest in CDs, and if so, which CDs will best suit their savings goals. The Sampsons are saving for a down payment on a new car that they will purchase for Sharon within a year. They hope to save money each month for their children’s college education, which begins twelve years from now.

Maturity Annualized Interest Rate (%)

1 month 1.0

3 months 1.2

6 months 1.6

1 year 2.0

3 years 2.5

5 years 2.8

7 years 3.0

10 years 3.2

Advise the Sampsons on the maturity to select if they decide to invest their savings in a CD for a down payment on a car. Discuss the advantages and disadvantages of the maturity that you recommend the Sampsons use to save for the down payment on a car.

                                                                                   

                                                                                   

                                                                                   

Advise the Sampsons on the maturity to select if they decide to invest their savings in CDs for their children’s education. Discuss the advantages and disadvantages of the maturity that you recommend the Sampsons use to save for their children’s education needs.

                                                                                   

                                                                                   

                                                                                   

If you thought that interest rates were going to rise in the next few months, how might this affect the advice that you give the Sampsons about investing in CDs with short-term versus long-term maturities?