Trisha Is Married and Has Young Children

question 69

Multiple Choice

Trisha is married and has young children.The couple is in the 37% tax bracket.In order for Trisha and her husband to work,they pay $5,000 for daycare which earns them a $1,000 dependent care credit.Trisha has been offered a new job.The new job will pay a $5,000 lower salary,but the new employer will offer $5,000 of paid child care.Trisha cannot claim the dependent care credit if she receives employer-paid child care.Which of the following statements is correct? (Ignore payroll taxes.)

• A)Trisha will have $850 additional after-tax income if she accepts the new job.
• B)Trisha will lose $4,000 net value if she accepts the new job.
• C)Trisha will have $1,850 additional after-tax income if she accepts the new job.
• D)Trisha will lose $3,150 of net value if she accepts the new job.