Question

An employee does not pay tax on the first $4000 of earnings and then 25% tax on the rest of earnings. If he wants to have $20000 net of tax earnings does he need

Answer 1

$68000

Explanation:

Tax free earning = first 4000

Tax on remaining amount = 25%

Total earning in other to have $20000 net of tax earning :

Net of tax = tax free earning + (25% * remaining amount)

Let remaining amount = x

20000 = 4000 + (0.25 * x)

20000 = 4000 + 0.25x

20000 - 4000 = 0.25x

16000 = 0.25x

x = 16000 / 0.25

x = 64000

Hence,

Total earning should be :

Tax free earning + roaming amount

4000 + 64000

= $68000