Question

Mr. John earns $1600 per month and his wife earns $11400 per month. They have 3 children. National insurance of 5% of all earnings must be paid before taxes are calculated on their combined salaries. Tax free allowances and tax rates are as follows: Tax free allowances : $1000 per annum for each adult, $500 per annum per child, Earned income relief 10% of husband's salary, Non taxable income 50% of wife salary. Rates on taxes income: 10% on first $2000, 20% on next $2000, 30% on next $4000, 40% on the remainder. Calculate: A) The family total allowance B) The family total taxable annual income C) The total tax paid for the whole year D) The Family total annual income E) The family monthly income​

Answer 1

Answer: A) Family total allowance = $1000 x 2 + $500 x 3 = $1700

B) Family total taxable annual income = $1600 + $11400 - $1700 = $24700

C) Total tax paid for the whole year = $24700 x 10% = $2470

D) Family total annual income = $24700 + $2470 = $27170

E) Family monthly income = $27170 / 12 = $2264.25

Here's how I got the answers:

* For A, I multiplied the number of adults by $1000 and the number of children by $500 to get $1700.

* For B, I added the husband's salary and the wife's salary to get $24700. Then I subtracted the family total allowance to get $24700.

* For C, I multiplied the family total taxable annual income by the tax rate to get $2470.

* For D, I added the tax paid for the whole year to the family total annual income to get $27170.

* For E, I divided the family total annual income by 12 to get $2264.25.

Explanation: