Question

Last year, Nevan’s gross pay was $45,150. The federal income tax percent that was withheld from his gross pay was 16%. The amount of money that Nevan actually owes the government after deductions is $6,150. Which of the following is true?

a) Nevan owes an additional $984 in federal
b) Nevan owes an additional $1,074 in federal
c) Will receive a refund of $984
d) Will receive a refund of $1,074

Answer 1

After calculating the federal income tax withheld from Nevan's gross pay at 16%, it turns out he has overpaid by $1,074. Therefore, Nevan is entitled to receive a refund of that amount. Option d.

Step-by-step explanation:

To determine whether Nevan will owe additional money to the government or receive a refund, we first need to calculate the total federal income tax withheld from his gross pay. Given that the federal income tax withholding rate is 16%, we can calculate the amount withheld as follows:

Gross Pay = $45,150
Federal Income Tax Withheld (16%) = $45,150 * 0.16 = $7,224

Nevan's actual tax liability is stated to be $6,150, which means that he has paid more in withholding than what he owes. We calculate the difference to determine his refund:

Withholding - Actual Tax Liability = Refund
$7,224 - $6,150 = $1,074

Therefore, Nevan will receive a refund of $1,074 (d).