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Karen Wilson and Katie Smith are looking at the company's health care options and trying to determine how much their net pay will decrease if they sign up for the qualified cafeteria plan offered by the company. Karen, a married woman with four exemptions, earns $2,175 per biweekly payroll. Katie, a single woman with two exemptions, also earns $2,450 per biweekly payroll. The biweekly employee contribution to health care that would be subject to the cafeteria plan is $190.
Compute the taxable income for Karen and Katie. Karen’s taxable income if she declines to participate in the cafeteria plan: Karen’s taxable income if she participates in the cafeteria plan: Katie’s taxable income if she declines to participate in the cafeteria plan: Katie’s taxable income if she participates in the cafeteria plan:
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Karen Wilson and Katie Smith are looking at the company's health care options and trying to determin...
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