With a growing family, Karen and Jeffrey know they should start investing more to provide for a secure future. Which of the following issues should they consider as they plan?
Karen and her husband, Jeffrey, are facing a new income tax situation this year. She is a corporate accountant and Jeffrey is an engineer. Their gross salaries total $89,000. Both graduated from four-year universities five years ago and are still paying off large student loans. She is now attending school part-time to prepare for the CPA exam. The Bosteins incurred considerable expenses in the process of adopting an infant this year, and they have the ongoing expense of daycare. In January of last year they closed on their new home. Although trained as an accountant, Karen's work has not involved income tax preparation. Help them consider the following questions.
A) Interest paid on money borrowed to invest is an itemized deduction.
B) Contributions to tax-deferred retirement accounts avoid taxes in the current year and grow tax-free until the time of withdrawal.
C) Qualified dividends and capital gains are taxed at a lower rate than ordinary income.
D) Municipal bond earnings are exempt from federal income tax.
E) All of the above
Answer: E
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