Question

assume your gross pay per pay period is $4,000.00, and you are in the 33 percent tax bracket. calculate your taxable pay and spendable income if you save $400.00 per pay period in a tax-sheltered annuity.

Answer 1

The taxable pay is $3,600.00 and the spendable income is $2,412.00.

Step-by-step explanation:

To calculate the taxable pay, we need to subtract the amount saved in the tax-sheltered annuity from the gross pay.

So, taxable pay = gross pay - amount saved

= $4,000.00 - $400.00 = $3,600.00.

To calculate the spendable income, we need to subtract the taxes from the taxable pay.

Since the tax bracket is 33%, the taxes amount to 33% of the taxable pay.

So, taxes = 0.33 * $3,600.00 = $1,188.00.

Therefore, spendable income = taxable pay - taxes

= $3,600.00 - $1,188.00

= $2,412.00.