Question

In: Accounting

Sally was hired at an annual salary of $60,000 on 1/1/20. She elected to contribute $2000...

Sally was hired at an annual salary of $60,000 on 1/1/20. She elected to contribute $2000 to her Flexible Spending Account (FSA) and her employer contributed $500 to the plan. She contributed $5,000 to the company’s 401(k) plan and the company contributed $2500. In addition, she contributed $100 from her payroll to the local United Way campaign. Compute the amount of her 2020 compensation that is subject to FICA taxes and the amount subject to income taxes.

Expert Solution

If you do not change your withholding, you may owe taxes at the end of the year.

Expected tax withholding$0*

Anticipated tax obligation$4,558**

Estimated under payment$4,558

Important Note: The accuracy of this estimate depends on the accuracy of the information you provide. The IRS makes no guarantees about the accuracy of this estimate and accepts no liability resulting from your use of the estimation.

* This is your projected withholding for the year if you make no changes and do not submit a new Form W-4. This number includes Federal income tax withheld and any estimated tax paid.
** This is your expected tax liability for the 2020 tax year reported on the 2020 Form 1040 due to be filed by April 15, 2021. This number includes Federal income tax, additional Medicare tax, and self-employment tax, if applicable.

Adjust Your Results to Avoid Owing a Balance

Use the slider below to select the approximate refund amount you'd like to get.

$0

$0$2,000

For a refund of approximately $0

Your Job, Annual Pre-tax Wages: $60,000

To get your desired refund amount, you will need $456 withheld from each paycheck, $456 more than your current tax withholding.

Your Information

The following is a recap of information entered on the preceding pages on which the above recommendation is based. Use the Edit buttons to go back to pages if you need to edit information.

PREPARED: SUNDAY, OCTOBER 25 2020

About YouEDIT

Filing statusSingle

Can you be claimed as a dependent?No

Total number of jobs1

Income & WithholdingEDIT

Total pre-tax income$60,000

Total nontaxable payroll deductions$8,000

Net income$52,000

Your Job

AdjustmentsEDIT

You have not entered any adjustments.

Adjusted Gross Income

Total income minus Adjustments

AGI$52,000

DeductionsEDIT

Deductions reduce your taxable income

Your standard deduction$12,400

Tax before credits

Taxable income (AGI minus deductions)$39,600

Income tax before credits$4,558

Tax creditsEDIT

You have not entered any tax credits.

Tax after credits

Total tax liability after credits$4,558

Total tax paid so far this year$0

Total tax paid this year if you do nothing$0

Total tax paid this year if you submit a new Form W-4 as recommended $4,558

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