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Ava and her husband, Leo, file a joint return and are in the 32% Federal...

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Accounting

Ava and her husband, Leo, file a joint return and are in the 32% Federal income tax bracket (AGI is $354,951) in 2021. Ava's salary is $122,550. Her employer offers a child and dependent care reimbursement plan that allows up to $6,800 of qualifying expenses to be reimbursed in exchange for a $6,800 reduction in the employee's salary. Because Ava and Leo have two minor children requiring child care that costs $7,480 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 7.65%.

Do not round intermediate computations. If required, round your final answers to the nearest dollar.

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