Answer:
$825
Explanation:
gross income $30,000
- IRA contribution ($5,500)
adjusted gross income $24,500
- standard deduction ($12,200)
taxable income $12,300
there is no 15% tax bracket, the tax bracket should be 12%, but we can assume it to be 15%:
$0 to $9,700 ⇒ $9,700 x 10% = $970
$12,300 - $9,700 = $2,600 x 15% = $390
total tax liability = $970 + $390 = $1,360
without the IRA contribution:
gross income $30,000
- standard deduction ($12,200)
taxable income $17,800
there is no 15% tax bracket, the tax bracket should be 12%, but we can assume it to be 15%:
$0 to $9,700 ⇒ $9,700 x 10% = $970
$17,800 - $9,700 = $8,100 x 15% = $1,215
total tax liability = $970 + $1,215 = $2,185
difference = $2,185 - $1,360 = $825, which is also equal to $5,500 x 15% = $825
