Question

Ebony's gross income is $46 660 with allowable tax deductions of $4120. a What is Ebony's taxable income? b Calculate the amount of tax due. c Ebony has paid $95 per week in tax. How much does Ebony owe in tax?

Answer 1

(a) Ebony's taxable income = $42,540

(b) Amount of tax due = $5190.3

(c) Amount of tax owed = $4810.3

Explanation:

Ebony's gross income = $46,660 (given)

Allowable tax deductions = $4,120 (given)

(a) Taxable Income = Gross income - Tax deductions

Ebony's taxable income = $46,660 - $4,120

Ebony's taxable income = $42,540

(b) Amount of tax due = 22% of Taxable Income,

Refer to the USA Tax Brackets for 2019 (See Attached image)

Amount of tax due = 10% on first $9,700 + 12% on ($39475-$9700) + 22% on ($42540-$39475).

Amount of tax due = 10% on first $9,700 + 12% on $29775 + 22% on $3065.

Amount of tax due = $970 + $3573 + $647.3

Amount of tax due = $5190.3

(c) Ebony pays $95 per week in tax. In four weeks (a month), she'd pay

$95 * 4 = $380

Amount of tax owed = Amount of tax due - Amount of tax paid

Amount of tax owed = $5190.3 - $380 = $4810.3