Trisha Is Married and Has Young Children

question 2233

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

---

Definitions:

Submission Agreement

A written agreement to submit a legal dispute to an arbitrator or arbitrating panel for resolution.

Settlement Agreement

A legally binding contract between parties resolving a dispute or lawsuit outside of court through mutual concessions.

Decision

The conclusion or resolution reached by a court, judge, or arbiter in a legal case.

Summary Jury Trial

A settlement method in which a trial is held but the jury's verdict is not binding. The verdict acts as a guide to both sides in reaching an agreement during mandatory negotiations that follow the trial. If a settlement is not reached, both sides have the right to a full trial later.