Richard's monthly salary is $8,600. Income tax schedule First $3,000.. no tax $3,001 to $5,000....10% Above $5,000....28% Required: a) Compute his total income tax liability b) Compute his net pay
Richard's monthly salary is $8,600. Income tax schedule First $3,000.. no tax $3,001 to $5,000....10% Above $5,000....28% Required: a) Compute his total income tax liability b) Compute his net pay
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
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1. Richard's monthly salary is $8,600.
Income tax schedule
First $3,000.. no tax
$3,001 to $5,000....10%
Above $5,000....28%
Required:
a) Compute his total income tax liability
b) Compute his net pay
Expert Solution
Step 1: a) Computation of his total income tax liability
a) First, let's find out how much of Richard's salary falls into each tax bracket:
$3,000 * 0% = $0 (no tax)
($5,000-$3,000)*10%= $2,000 * 10% = $200
($8,600-$5,000)= $3,600 * 28% = $1,008
Total income tax liability = $0 + $200 + $1,008 = $1,208
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