Dan plans to reduce his work schedule and work only half-time for WJJJ in 2019. He has been writing songs for several years and wants to devote more time to developing a career as a songwriter. Because of the uncertainty in the music business, however, he would like you to make all computations assuming that he will have no income from songwriting in 2019. To make up for the loss of income, Freida plans to increase the amount of time she spends selling real estate. She estimates that she will be able to earn $90,000 in 2019. 1. Assume that all other income and expense items will be approximately the same as they were in 2018 (including the prize winnings). 2. Assume that Willie will be enrolled in college as a full-time student for the summer and fall semesters. No changes regarding Gina and Sam.3. Assume anyone qualified as a dependent in 2018 will continue to so in 2019. 4. The $3,100 commission received on January 10, 2018, is included in the $90,000 income to be earned by Freida in 2018.
5. The 22% 2018 marginal tax rate remains the same in 2019.
6. Assume a payroll tax rate for FICA and Medicare of 7.65% and the Kentucky state income rate of 4%.
Interest income, dividend income, partnership income, and the standard deduction are the same for 2019. The MFJ standard deduction for 2019 is $24,000. The Butlers will use the greater of itemized deductions or the standard deduction.
Complete the following paragraph regarding whether the Butlers will have more or less disposable income (after Federal income tax) in 2019.
There will be a net $? reduction in salary and wages which will also result in a $? decrease the Kentucky income tax, a $ ?decrease in the Social Security tax, and Medicare tax. and a $ decrease in the Federal income taxes. The net reduction in the Butler's aftertax cash flow will be approximately $22,185 .