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You have set up your tax preparation firm as an incorporated business. You took $80,000 from the firm as your salary. The firm's taxable income for the year (net of your salary) was $30,000. Assume you pay personal taxes as an unmarried taxpayer. Use the rates presented in Table 3.6. (Do not round intermediate calculations. Round your final answers to 2 decimal places.) a. How much tax must be paid to the federal government, including both your personal taxes and the firm's taxes? Total taxes S 1,271.25 b. By how much will you reduce the total tax bill if you cut your salary to $50,000, thereby leaving the firm with taxable income of $60.000? Tax reduction c. What allocation will minimize the total tax bill? Hint: Think about marginal tax rates and the ability to shift income from a higher marginal bracket to a lower one. Amount ninante si in minimize the thin TABLE 3.6 Personal tax rates, 2018 Tax Rate (%) 10 Single Taxpayers $0-$9.525 $9.526-$38.700 $38.701-$82.500 $82.501-$157.500 $157,501-$200.000 $200.00 1-$500.000 $500,001 and above Taxabla Income ($) Married Taxpayers Filing Joint Returns $0-$19.050 $79.05 1-$77.400 $77 401-$165,000 $ 165,00 1-$315.000 $325.00 1-$400.000 $400.00 1-$600.000 $600.00 and above 12 22 24 32 35 37

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