Henry and Kelly are married and live together. They both work. They have a combined gross household income of $120,000.00. Henry contributed $10,500 to his 401(k). Kelly contributed $5,000 to her company's Roth 401(k). Henry put $5,500 into his Roth IRA. Kelly does not have a Roth IRA. Kelly is still paying off a student loan for her master's degree. She owes $15,000.00. Last year she paid $2,150.00 in interest on her student loan. The couple paid $8,600.00 last in year in interest on their home mortgage. Henry and Kelly paid $3,000.00 last year in property taxes. Henry gave $5,000.00 to charity last year (his church). Henry and Kelly have three children (ages 3, 6, and 11). The children all live at home and do not work or earn income. Henry and Kelly bought a Harley Davidson Scoot (a Three-wheeled, electric car) last year. They purchased it brand new for $27,000.00. The car's battery can be recharged by plugging into an external source of electricity.

Address the following issues:

• How much are Henry and Kelly's total 'Above-the-line' deductions? (Show each item as well as total).
• How much was Henry and Kelly's total income reduced by contributions to 'tax-deferred' retirement savings accounts?
• Calculate how much Henry and Kelly's total 'below-the-line deductions should be (assuming they were to itemize their deductions). Show each item as well as the total.
• How much will Henry and Kelly receive in the form of tax credits? Show each item as well as the total amount.

Answer rating: 100% (QA)

Participate in a retirementsavings plan at work This is usually the easiest way to save for retirement If you have an automatic retirement plan the money is invested automatically in the plan before y... View the full answer