Question

"Calculate how much tax should be refunded or paid based on the following information:

Federal Income tax you have paid for the year= $4,754Federal Income tax owed for the year = $5,797
A) The contractor owes $7500
B) The contractor gets a refund of $7500
C) The contractor owes $1043
D) The contractor gets a refund of $1043"

Answer 1

The contractor owes additional tax because the federal income tax paid ($4,754) is less than the tax owed ($5,797). After subtracting what was paid from what is owed, the contractor owes $1,043.

Step-by-step explanation:

To calculate whether a contractor owes tax or gets a refund, compare the amount of Federal Income tax paid with the Federal Income tax owed for the year. If more tax was paid than owed, there will be a refund; if less was paid than owed, the contractor will owe additional tax.

In this case, the contractor has paid $4,754 but owes $5,797. To determine the exact amount the contractor owes or is refunded, subtract the amount paid from the amount owed:

Amount owed - Amount paid = $5,797 - $4,754 = $1,043

Since the amount owed is greater than the amount paid, the contractor owes additional tax. Therefore, the correct answer is:

C) The contractor owes $1,043