Question

Daniels is considering two job offers: a full-time permanent position that pays $78,000 annually and a full-time contract job that pays $40 per hour. The following information is used for calculating income, taxes, and costs. The contract job is self-employment, which is taxed an additional 7.65% of gross income. The U.S. government deducts Social Security (6.2%) and Medicare (1.45%). Daniels will deduct 15% of gross income to cover federal income tax. Daniels does not live in a state with state income tax. The permanent position will cost you $95 per month in health care benefits and 4% of your after-tax income in retirement contributions. The contract job will cost you $150 per month in health care benefits and 8% of your after-tax income in retirement contributions. Which job has a larger gross annual income?

A. Same gross annual income
B. Contract job
C. Full-time position

Answer 1

Option B,contract job

Explanation:

It is likely the number of hours in a work week is 40 hours .

With fifty weeks in year 2020 and 10 ten days of Bank Holidays,the gross annual income from the contract full time employment can be computed thus

gross annual income=$40*40*(53-2)=$81,600

The pay is $40 per hour

In a week 40 hours are worked

There are fifty three weeks in the year minus 10 days of holiday which represents 2 working weeks for a Monday to Friday job

The gross annual income for full time permanent role is $78,000

As a result,the full time contract job pays more