A man has a wife and six children (the oldest of whom is 13 years old ). He claims 32000 for a dependent relative. How much tax does he pay in a year in which he earns 670000?

Answer 1

Determining how much tax the man pays requires a few steps, including understanding the tax system, the applicable deductions, and calculating the net taxable income. Here’s a simplified example assuming a hypothetical tax system.

**Assumptions:**
1. The tax system includes a standard personal deduction.
2. Dependents provide additional deductions.
3. Different tax brackets might apply depending on income amount.

**Steps:**

1. **Income and Standard Deductions:**
- Gross Income: $670,000

2. **Dependent Deductions:**
- Assume the tax system allows a deduction for each dependent. The man has a wife and six children, making 7 dependents. He claimed $32,000 as a deduction for a dependent relative which may be considered in addition to traditional dependents or instead of them, depending on the specific tax code. Here, we will keep the $32,000 deduction for simplicity.

3. **Additional Details:**
- Let's assume that each dependent provides a specific deduction amount which we'll denote as \(D\). If no tax code specifics are given, we'll assume no additional personal dependent deductions are considered here, focusing solely on the $32,000 deduction.

4. **Calculating Net Taxable Income:**
- Deduct the $32,000 from the gross income:

\[\text{Net Taxable Income} = \text{Gross Income} - \text{Dependent Deduction}\]
\[\text{Net Taxable Income} = 670,000 - 32,000\]
\[\text{Net Taxable Income} = 638,000\]

5. **Applying Tax Brackets:**
- Suppose the tax system follows hypothetical tax brackets where income is taxed progressively. For simplicity, assume:
- 10% on income up to $50,000
- 20% on income from $50,001 to $100,000
- 30% on income from $100,001 to $250,000
- 40% on income above $250,000

**Calculating Taxes:**
- First $50,000: \(50,000 \times 0.10 = 5,000\)
- Next $50,000 ($50,001 - $100,000): \(50,000 \times 0.20 = 10,000\)
- Next $150,000 ($100,001 - $250,000): \(150,000 \times 0.30 = 45,000\)
- Remaining $388,000 ($250,001 - $638,000): \(388,000 \times 0.40 = 155,200\)

**Total Tax Calculation:**
- Adding up the tax amounts from each bracket:

\[
5,000 + 10,000 + 45,000 + 155,200 = 215,200
\]

**Final Tax Payable:**
The man pays $215,200 in taxes for the year.

**Note:** Tax systems vary greatly; you would need to check the specific tax code or contact a tax professional to get precise figures based on your jurisdiction.