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Ahmed is self-employed. He has a revenue of $170,000. His expenses for the year is $50,000. The following are the prevailing Income Tax slabs: Up to $9,525                         10%                            $9,525 – $38,700                 12%                            $38,700 – $82,500               22%                            $82,500 – $157,500             24%                            $157,500 – $200,000          32%                            $200,000 – $500,000          35%                            Above $500,000                   37%                                        If he received $12,000 in tax deduction, what is his taxable income for the year? How much did he pay in federal income tax?

Ahmed is self-employed. He has a revenue of $170,000. His expenses for the year is $50,000. The following are the prevailing Income Tax slabs: Up to $9,525                         10%                            $9,525 – $38,700                 12%                            $38,700 – $82,500               22%                            $82,500 – $157,500             24%                            $157,500 – $200,000          32%                            $200,000 – $500,000          35%                            Above $500,000                   37%                                        If he received $12,000 in tax deduction, what is his taxable income for the year? How much did he pay in federal income tax?

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Ahmed is self-employed. He has a revenue of $170,000. His expenses for the year is $50,000.

The following are the prevailing Income Tax slabs:

Up to $9,525                         10%                           

$9,525 – $38,700                 12%                           

$38,700 – $82,500               22%                           

$82,500 – $157,500             24%                           

$157,500 – $200,000          32%                           

$200,000 – $500,000          35%                           

Above $500,000                   37%                                       

  1. If he received $12,000 in tax deduction, what is his taxable income for the year?
  2. How much did he pay in federal income tax?
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