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Retu Adjusted and Net Income assignment Adjusted income 1 1 1 point What is Casey's yearly gross income? Casey makes a gross monthly income of $6,000. Find her deductions below Type your answer... Monthly Expense Deduction Amount deducted Medical insurance Pre- tax $250 2 1 point 401K Pre-tax 5% What is Casey's monthly adjusted gross incom O $4260.99 HSA Pre-tax $225 $5,225 Income taxes 12% $4118.00 Social security 5% $6000 Medicare 1.45% Based on the information above answer the following 3 1 point

Sagot :

Answer

1) Yearly gross income = $72000

2) Adjusted Gross Income = $5225

Option B is correct.

3) Monthly Net Income = $4260.99

Explanation

1) Yearly gross income

Gross income is the total amount earned before all of the tax and deductions are removed. So, yearly gross income is the total amount earned in a year before all the deductions are made.

For this question, the monthly gross income is $6000

Since there are 12 months in a year,

Yearly gross income = 12 × $6000 = $72000

2) Adjusted Gross income

The adjusted gross income is used to calculate the taxes. It is what is left of the gross income when all the pre-tax deductions are made. Examples of the pre tax deductions in this question include

- Medical Insurance Pre-tax = $250

- 401k Pre-tax = 5%

- HSA Pre-tax = $225

Monthly Gross Income = $6000

Adjusted Gross Income = (Gross Income) - (Deductions)

Deductions = (250) + (5% × 6000) + (225)

= 250 + 300 + 225

= $775

Adjusted Gross Income = (Gross Income) - (Deductions)

= $6000 - $775

= $5225

3) Monthly net income

The monthly net income is the actual amount the person takes home. It is the Adjusted Gross Income less all the tax deductions.

For this question, the tax deductions include

- Income taxes = 12%

- Social security = 5%

- Medicare = 1.45%

Adjusted Gross Income = $5225

Monthly Net Income = (Agjusted Gross Income) - (Tax deductions)

Tax Deductions = (12% × 5225) + (5% × 5225) + (1.45% × 5225)

= (627) + (261.25) + (75.7625)

= $964.0125

Monthly Net Income = (Agjusted Gross Income) - (Tax deductions)

= $5225 - $964.0125

= $4260.9875

= $4260.99 to the nearest 2 decimal places

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