(Solved): Ava and her husband, Leo, file a joint return and are in the 24% tax bracket in 2022 . Ava's employe ...

Ava and her husband, Leo, file a joint return and are in the

tax bracket in 2022 . Ava's employer offers a child and dependent care reimbursement plan that allows up to

of qualifying expenses to be reimbursed in exchange for a

reduction in the employee's salary (Ava's salary is

). Because Ava and Leo have two minor children requiring child care that costs

each year, Ava is wondering if she should sign up for the program instead of taking advantage of the credit for child and dependent care expenses. Analyze the effect of the two alternatives. Assume a FICA tax rate of

. Do not round intermediate computations. If required, round your final answers to the nearest dollar. Click to view Percentage Credit based on Adjusted Gross Income. a. If Ava and Leo take advantage of the plan, they.

save income taxes because the reimbursement of child care expenses is

gross income. The

associated with participating in the plan would be

. In addition, Ava will save

of FICA taxes due to the reduction in salary. Alternatively, if Ava does not take advantage of the plan, their child and dependent care tax credit, will be

. Therefore Ava and Leo's income taxes will be

(.

if they do not participate in the plan. b. Assume, instead, that Ava's salary was

and Ava and Leo's AGI is

and they are in the

tax bracket. The

associated with participating in the plan would be

. In addition, Ava will save

of FICA taxes due to the reduction in salary. Alternatively, if Ava does not take advantage of the plan, their child and dependent care tax credit will be

. Therefore Ava and Leo's income taxes will be

if they do not participate in the plan.