Question

The floor manager of the factory earns €45,000 annually. She has a standard rate cut-off point of €28,000 and a tax credit of €4,000. If the standard rate of income tax is 20% and the higher rate is 41%, how much income tax does she have to pay a year?

Answer 1

Answer:

She has to pay income tax of  8,570 Euros

Step-by-step explanation:

On the 28,000 Euros,the floor manager would pay taxes at the rate of 20% which is computed thus:

tax at 20%=28,000 Euros*20%=5,600 Euros

The remaining earnings would be charged to tax at higher tax rate of 41% as follows:

tax at 41%=45,000 Euros-28,000 Euros=17,000 Euros*41%=6,970  Euros

Total amount of taxes=5,600+6970 = 12,570 Euros

Taxes payable =total taxes -tax credit

The manager has a tax credit of 4,000 Euros

taxes payable= 12,570-4,000=8,570 Euros