Question

Currently, Jen receives a salary of $48,000 and pays premiums of $2,000 toward the group insurance packages that her employer provides as a fringe benefit. Her income tax rate is 24%. Jen's employer is considering reducing her salary by $2,000 to $46,000 and paying the $2,000 insurance premiums for her. How much money does Jen have available to pay for all other living expenses after paying both the income tax and her insurance premiums in her current salary configuration?

a.$11,520
b.$34,480
c.$36,480
d.$48,000
e.$2,000

Answer 1

Jen has $34,480 available for living expenses after paying income taxes at a 24% rate and her $2,000 insurance premiums on her current salary of $48,000. So, the correct answer is: b. $34,480

Step-by-step explanation:

To determine how much money Jen has available for all other living expenses after paying both the income tax and her insurance premiums in her current salary configuration, we need to calculate her net income.

First, we find her annual income after taxes and then subtract the insurance premiums she pays.

Jen's annual income: $48,000

Income tax rate: 24%

Annual income taxes: $48,000 * 0.24 = $11,520

Income after taxes: $48,000 - $11,520 = $36,480

Insurance premiums: $2,000

Money available for living expenses: $36,480 - $2,000 = $34,480

Therefore, Jen has $34,480 available to pay for all other living expenses after paying both the income tax and her insurance premiums.

So, the correct answer is: b. $34,480