Question

Mr.Allen has a wife and 3 kids.His monthly salary during the year 2007 was $7500.
a)Calculate his annual salary $90,000 is this right?

Information on calculating income tax for 2007 is shown in the table shown

Allowances:Husband-$10,000,Wife-$5000, Each child-$2500
Tax rate-22% of the taxable income
Taxable income = Annual Salary-Total Allowances.

b)Calculate Mr.Allen's TOTAL allowances for 2007-22,500 is this right?
c)Calculate Mr.Allen's income tax for 2007 90,000-22,500=67,500 is this right?
what percentage of Mr.Allen's annual salary was paid in come tax? how do i work this?

Answer 1

Whoops! He didn't pay $67,500 in taxes!

He was taxed on $67,500.

67,500 * 0.22 = $14,850 was the amount he paid in taxes.

14,850 / 90,000 = 0.165 = 16.5%

He paid 16.5% of his salary in taxes.