Can you please give me an outline of how I can form this into an essay?
Your new financial planning clients are Howard and Wanda. They are in their early thirties and have two young children, Bob (age 3) and Genevieve (age 1). Wanda makes $125,000 per year and Howard makes $125,000 per year. Wanda just received $1 million in life insurance when her grandfather died. They have come to you for advice on how to invest the $1 million and minimize the amount of income tax that they have to pay. They want to save for retirement and for their children's college education. They are willing to donate up to $10,000 per year to charity and can be flexible about the timing of the donations. They do not have any significant plans to change their employment status or open a business, but their income level must stay at $250,000.
Your paper should be at least three pages long. First, calculate the amount of income tax that they will pay without any planning. Remember, in addition to their salaries, with the $1 million invested at 5%, the couple will also have $50,000 of interest income, for a total of $300,000 of annual income.
Use different tax savings strategies: lowering or deferring income; taking advantage of lower tax rates when applicable; maximizing deductions when possible. Calculate the tax savings from your plan over more than just one year, but assume the same tax rate in future years. If a technique results in a deferral of income tax (rather than avoidance), explain how long the tax can be deferred.
Income Tax Paper
Criteria
Ratings
Pts
Basic Requirements and Readability
Did the paper fulfill the basic requirements? At least 3 pages and have few or no typos or grammatical errors. Did the paper flow? Were citations (if any) used appropriately?
4.0 pts
Use a variety of tax saving devices
Were all of the different tax strategies reviewed? Lowering or deferring income; Taking advantage of lower tax rates; and Maximizing deductions and credits
4.0 pts
Analysis
Did the paper demonstrate an understanding of the tax concepts show independent analysis of the tax provisions: offer creative solutions for reducing taxes explore how Howard and Wanda could change their behavior to accomplish their goals of (1) saving for college and retirement and (2) lowering their income tax.
4.0 pts
Calculations
Were the potential tax savings calculated correctly? Were potential tax savings over more than one year discussed?
3.0 pts
Total Points: 15.0
