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junior is a roofing supervisor who earns $55000 per year and has deductions of $10000. he...

junior is a roofing supervisor who earns $55000 per year and has deductions of $10000. he has an opportunity to earn an extra $2500. Junior's average tax rate is 8% and his marginal tax rate is 12%for 2018. He and his employer each pay is 7.65% toward social security and medicare. how much is junior's after tax cash flow if he does the extra work?

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Answer #1
Junior earning peryear $   55,000.00
Deduction $ (10,000.00)
Net earning earning per year $   45,000.00
Earning from Extra work $      2,500.00
Total Cash inflow $   47,500.00
Tax @8% as per average tax $      3,800.00
Tax @8% on Normal Earning( 1) $      3,600.00
( 45000*8%)
Marginal tax @12% on extra income (2) $         300.00
(2500*12%)
Total Tax liability (1+2) $      3,900.00
Tax as per average tax $      3,800.00
Hence Net cash flow after tax will be $   43,700.00
( 47500-3800)
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