MYP Assessment - Working abroad?

Transcription

1 MYP Assessment - Working abroad? This task will be assessed on MYP criteria: A Knowledge and Understanding D Reflection in Mathematics Task: By Comparing income and taxes in two countries, make a decision about choice of country for work. Discuss your understanding of income splitting and the taxation effects. In other words, what are the advantages/disadvantages for filing your income tax individually or as a family? Scenario Mr. and Mrs. Smith are considering a move abroad to the U.S.A from their home country of Australia, but they are concerned about the amount of taxes that they might have to pay. Both of them work. Mrs. Smith earned $75,000 during the year and Mr. Smith earned $68,500. When they move to the U.S.A, they will be earning an equivalent income as in Australia. PART 1 a) Mr. Smith earns what percentage of his wife s income? 68,500/75,000 x 100 = Mr. Smith earns 91.3% of his wife s income b) What percentage would Mr. Smith s income need to increase to match Mrs. Smith s income? (75,000-68,500) / 68,500 x 100 = Mr. Smith needs to increase 9.49% to match Mrs. Smith s income c) Here is a taxation calculation of work colleague of Mrs. Smith in Australia ( ) Explain what this expression means in context. $3,572 is the tax that her colleague needs to pay because he income is in between $18,201 to $37, ,000 x = $3,900 $3,572 + $3,900 = $7,472 Therefore she will need to pay $7,472 IB Taskbank Mathematics 1

2 Determine Mrs. Smith s colleague s Australian salary from this information. She earns $30201 because $18, ,000 = $30201 d) Nate (Mr. and Mrs. Smith s son) has an opportunity for a part time job when he moves to the U.S.A. His tax in the first year is calculated below. ( ) + ( ) What is Nate s possible income from his job? Show/explain how you determined his salary. Nate s possible income is $20,000 because Between $8,925 to $36,250 $11,075 + $8925 = $20,000 If Nate earned this income in Australia, determine the income tax that he would pay. If he earns $20,000 He must pay $3,572 because the income Nate gets is in between $18,201 to $37,000. ($20,000 $18,201) x (32.5/100) = $ $ $3,572 = $4, Nate will need to pay $4, in Australia e) Calculate Mrs. Smith s total tax payable and Mr Smith s total tax payable in Australia. Use this calculation to determine the family s net income. Mrs. Smith s income $75,000 $17,547 + ($75,000 - $37,001) x 0.37 $17,547 + $14, = $31, Mrs. Smith will need to pay $31, Net income = $75,000 - $31, = $43, Mr. Smith s income $68,500 IB Taskbank Mathematics 2

3 $17,547 + ($68,500 - $37,001) x 0.37 $17,547 + $11, = $29, Mr. Smith will need to pay $29, Net income = $68,500 - $29, = $39, Mrs. Smith s net income + Mr. Smith s net income $43, $39, = $82, Therefore Smith s family s net income is $82, f) Calculate the net income of Mrs. and Mr. Smith in the U.S.A is they filed as Single Filers. Mrs. Smith $8,925x0.1 + $36,250x ($75,000 - $36,250)x 0.25 $ $ $ = 16, Net income of Mrs. Smith $75,000 16, = $58, Mr. Smith $8,925x0.1 + $36,250x ($68,500 - $36,250)x 0.25 $ $ = Net income of Mr. Smith $68,500 - $ = $ Smith s family net income will be $58, $ = $113,090 IB Taskbank Mathematics 3

4 g) Calculate the net income of Mrs. and Mr. Smith in the U.S.A is they filed as Married Joint Filers. $75,000+ $68,500 = $143,500 $17,850x0.1 + $72,500x ($143,500 $72,500)x = $30,410 Net income will be $143,500 - $30,410 = $113,090 Reflection: 1. Compare the total net income of the Smith family in both countries. Which country is most favorable if you wanted to save money? Use your calculations to support your argument. Total net income America $113,090 Australia $82, Living in America is more favorable if you want to save money because you can save $ more. These answers make sense because looking quickly at the table for taxation between America and Australia. Australia s percentages of tax are higher than America. These tax calculations are very useful and needed in real life because when I grow older I will need to pay tax. By comparing these two countries tax, you will know in which country you can get more net income. By doing this you can save your money. But in real life you also will need to consider about the rate of money exchange. So it s not 100% accurate that you will pay less tax money in America. It s because the value of US $1 is different from AU $1. To make this answer very accurate, you should change the Australian dollar rate to American or American dollar rate to Australian. 2. Using your calculations, discuss your understanding of income splitting and the taxation effects. IB Taskbank Mathematics 4

5 You need to pay the same for Single Filers and Married Joint Filers. There isn t any amount difference because for single filers. Smith s family will need to pay $113,090 and for married joint filers Smith s family will need to pay $113,090. The answer does make sense because the amounts of you pay for single filers and married joint filers are same until 25%. Maximum tax 10%: 2x Single filers = married joint filers 10%: 2x $8925 = $17,850 15%: 2x $36,250 = $72,500 25% maximum of single filers and married joint filers doesn t have to be same because Mrs. Smith s income and Mr. Smith s income are not over $87,850. And even if you add the Mrs. and Mr. Smith s income the income is not over $146,400. Therefore you wouldn t have to look at those numbers to solve the problem. But if you earn more than $146,400 as married joint filers, using married joint filers will make you pay less tax than single filers because from $146,400 the difference between single and married joint filers aren t half anymore. Which means if your income with you and your partner is more than $146,400 2x Single Filers > Married Joint Filers IB Taskbank Mathematics 5

6 Reference Material Australian Taxation Table 2013/2014 Taxable Income Tax on this Income $0 - $18,200 Nil $18,201 - $37,000 $ 3,572 PLUS 32.5% for income over $18,201 $37,001 - $80,000 $ 17,547 PLUS 37% for income over $37,201 $80,001 and over $ 54,547 PLUS 45% for income over $80,001 American Taxation Table 2013/ IB Taskbank Mathematics 6

7 IB Taskbank Mathematics 7

8 Criterion A Knowledge and Understanding Achievement level Grade 8 level descriptor 0 The student does not reach a standard described by any of the descriptors below The student generally makes appropriate deductions when solving simple grade appropriate problems in familiar contexts. The student generally makes appropriate deductions when solving more-complex grade appropriate problems in familiar contexts. The student generally makes appropriate deductions when solving challenging grade appropriate problems in a variety of familiar contexts. The student consistently makes appropriate deductions when solving challenging grade appropriate problems in a variety of contexts including unfamiliar situations. Feedback Criterion D Reflection in Mathematics Achievement level Adapted Descriptor 0 The student does not reach a standard described by any of the descriptors given below. 1 2 The student attempts to explain whether his or her results make sense in the context of the problem. The student attempts to describe the importance of his or her findings in connection to real life. 3 4 The student correctly but briefly explains whether his or her results make sense in the context of the problem and describes the importance of his or her findings in connection to real life. The student attempts to justify the degree of accuracy of his or her results where appropriate. 5 6 The student critically explains whether his or her results make sense in the context of the problem and provides a detailed explanation of the importance of his or her findings in connection to real life. The student justifies the degree of accuracy of his or her results where appropriate. The student suggests improvements to the method when necessary. Criterion D Reflection in Mathematics IB Taskbank Mathematics 8