FIN2300 Assignment 2

FIN2300 ASSIGNMENT #2: PART 1 and Part 2

ASSIGNMENT #2: PART 1
Facts: Your 2013 earned income from your employer was $55,000 plus a $2,500
bonus. You also had $200 of interest income. Your employer has already withheld
from your paychecks $5,700 in federal withholding taxes. You are single and have
no other dependents other than yourself. Calculate your total federal income tax
obligation for the year 2013.
Go to: “IRS.gov”.
Print “Form 2013 1040 EZ Income Tax Return for Single and Joint Filers With No
Dependents” (2 pages, but you only need to complete and submit Page 1.
Go to: “Instructions 2013 1040 EZ” for any additional help.
Print your name and NetID at the top of the form. Do not enter your address or
SS#.
Complete the return to calculate your total federal tax obligation for 2013.
Task 1: Enter your earned income.
Task 2: Enter any taxable interest.
Task 3: Calculate your “adjusted gross income”.
Task 4: Assuming you are single and no one else claims you as a dependent, enter
your standard deduction.
Task 5: Calculate your “taxable income”.
Task 6: Enter the amount your employer has already withheld from your
paychecks and, assuming you have no tax credits to claim, determine your “total
payments and credits”.
Task 7: Go to: “2013 1040 EZ Instructions”. Locate and enter your total federal
income tax obligation for the year 2013 by using the 2013 EZ Tax Table.
Task 8: Calculate whether you are entitled to a “refund” or you “owe” additional
taxes. Enter the amount in the appropriate space.
Where it says “Sign Here” write “VOID”
Go on to Part 2 of this Assignment.

PART 2: Print, Answer, Staple to Part 1 and Turn In Beginning of Class)

This exercise is to see how much monthly “disposable income” you will have after

 payroll deductions and savings are subtracted from your adjusted gross income.

To do this, you need to start with your earned income ($55,000 plus a $2,500

bonus) and unearned interest income of $200.  Make the following subtractions from your adjusted gross income.

Enter your “adjusted gross income” (See Part 1 1040EZ)                     _____________

Calculate and subtract each of the following annual deductions separately.

1. Social Security: (your share of earned income only)                    ____________

1. Medicare: (your share of earned income only)                             ____________

1. CASDI (1.0% of earned income) CA State Disability Ins.           ____________

1. Federal income tax 2013: As you calculated from Part 1           _____________

1. State income or sales taxes due:  Enter $2,500                             ____________

1. $200 per month for medical insurance (your contribution)         ____________

1. Savings & Investment of 15% of EARNED income                     ____________

1. Subtract lines 1-7 from your adjusted gross income to get

your total annual disposable income.                                             ____________

1. Divide line 8 by 12 to get your monthly disposable income.        ____________

Continue on to the next page.

Enter your monthly disposable income from line 9 above.          $______________

Using the guideline percentages below, calculate the “MONTHLY” $ amount of

each expense.

            Housing                   (35%) $_____________________

            Food                         (15%) $_____________________

            Utilities                    (5%)   $_____________________

            Transportation       (10%) $_____________________

            Debt repayment      (10%) $_____________________

            Clothing                   (5%)   $_____________________

            Entertainment         (10%) $_____________________

            Misc.                        (10%)  $_____________________

            Savings of 15% are already included above.

This exercise can be the starting point of preparing your own budget.

Staple Part 1 and  Part 2 together.