250+ word memo + Excel spreadsheet showing calculations
Details: Your friend, Sal, has checked the tax laws and knows he can save on federal taxes by contributing pre-tax dollars to his 401(k) plan. Sal wants to know exactly how much he would save in taxes by contributing to his 401(k) plan. He can invest up to 10% of his income into the plan. His current income is US$50,000 per year. He is in the 25% tax bracket.
In a memo to Sal, outline how much he would save in taxes by contributing to his 401(k) plan. In your Excel spreadsheet, show Sal the calculations he would perform to help him understand how much he could save in federal taxes if he was to contribute the following percentages of his gross salary of $50,000 per year to his 401(k) plan: 2%, 4%, 6%, 8%, and 10% of $50,000. Additionally, provide Sal with other suggestions to minimize his taxes.