Question

You have a salary of $30 000, an RPP deduction of $2 000, paid $1 000 interest on your mortgage and paid union dues of $800. If the basic personal amount is $11 635 and the federal tax rate is 15 percent, what federal tax do you owe?

A) $4200
B) $2259
C) $2829
D) $2335

Answer 1

To calculate the federal tax owed, subtract the deductions from the total income to find the taxable income. Then, multiply the taxable income by the federal tax rate to determine the federal tax owed.

Step-by-step explanation:

To calculate the federal tax owed, we need to find the taxable income first. The taxable income is the total income minus the deductions. In this case, the total income is $30,000 and the deductions are $2,000 (RPP), $1,000 (mortgage interest), and $800 (union dues), which adds up to $3,800. Therefore, the taxable income is $30,000 - $3,800 = $26,200.

The federal tax rate is 15 percent, so we multiply the taxable income by 15%: $26,200 × 15% = $3,930.

Therefore, the federal tax owed is $3,930.