Question

You purchase a 6 percent $10,000 bond for $9,180 plus $156 in accrued interest for a total outlay of $9,336. Subsequently, you receive a $300 interest payment. You are in the 20 percent income tax bracket. How much tax do you owe on the interest payment?

Answer 1

Tax owed on a $300 interest payment for someone in the 20 percent income tax bracket is $60.

Step-by-step explanation:

When you receive a $300 interest payment from a bond and are in the 20 percent income tax bracket, the tax you owe is calculated by multiplying the interest amount by your tax rate. In this case, the tax owed on the interest payment would be:

Interest Payment x Tax Rate = Tax Owed

$300 x 0.20 = $60

Therefore, you owe $60 in tax on the interest payment from the bond.

The tax owed on the interest payment can be calculated using the formula:

Tax owed = interest payment x tax rate

In this case, the interest payment is $300 and the tax rate is 20%. So, the tax owed on the interest payment is:

Tax owed = $300 x 0.20 = $60