Jim and Shirley Irvin,a Newly Married Couple,will Be Filing a Joint

question 9

Essay

Jim and Shirley Irvin,a newly married couple,will be filing a joint tax return for the first year.Because both work as independent contractors (both are soccer coaches),their income is subject to some variability.However,because their earnings are not taxed at the source,they know that they have to pay estimated income taxes on a quarterly basis,based on their estimated taxable income for the year.To help calculate this tax,the Irvins would like to set up a spreadsheet-based decision model.Assume that they have the following information available:
Their only source of income is from their jobs as soccer coaches.The would like to put away 3% of their total income in a retirement account,up to a maximum of $4,000.Any amount the put in that account can be deducted from their total income for tax purposes.They are entitled to a personal exemption of $3,300 each.There is a standard deduction for married couples of $11,500,meaning this amount is free from any taxes and can be deducted from total joint income.Jim makes an estimated $41,000 and Shirley makes an estimated $36,000.The tax brackets are 9% for up to $17,000,14% for $17,001 to $70,000,and 21% for $70,001 to $140,000.What are the estimated taxes per quarter that Jim and Shirley will have to pay?

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Definitions:

Magic Number

Refers to the short-term memory capacity, traditionally considered to be 7±2 items, as postulated by psychologist George A. Miller.

Short-term Memory

The ability to keep a limited quantity of data actively accessible in one's consciousness for a brief duration.

Miller

George A. Miller was an American psychologist who made significant contributions to the cognitive psychology field, notably proposing that the human mind can hold 7 ± 2 pieces of information in short-term memory.

Maintenance Rehearsal

A cognitive process of repeatedly reviewing information to be retained in short-term memory and possibly encoded into long-term memory.