Question

Job A pays an annual salary of $42,100, while job B pays $44,400. The taxpayer choosing between the two jobs files his federal income tax return with a standard deduction of $5700, only himself as an exemption for $3650, and no additional adjustments to income. After taxes, what is the difference in pay between the two jobs? Use the table below as a guide. Answers A.$2300 , B.$345 , C.$1845 , D.$574. Please help and only respond with 100%accurate answers. If you can the formula as well that would help.

Answer 1

The Answer is $1845.

Answer 2

Calculation for Job A:

Annual salary = $42100

Standard deduction = $5700

Exemption = $3650

Taxable amount = 42100 - 5700 - 3650 = $32750

32750 belongs to catagory 8350-33950 of the given table.

So the tax will be = 835 + 15% of (32750-8350)

= 835 + 0.15(32750-8350)

= 835 + 0.15(24400)

= 835 + 3660

= 4495

Pay after tax = 42100- 4495 = $37605

Calculation for Job B:

Annual salary = $44400

Standard deduction = $5700

Exemption = $3650

Taxable amount = 44400 - 5700 - 3650 = $35050

32750 belongs to catagory 33950-82250 of the given table.

So the tax will be = 4675 + 25% of (35050-33950)

= 4675 + 0.25(35050-33950)

= 4675 + 0.25(1100)

= 4675 + 275

= 4950

Pay after tax = 44400- 4950 = $39450

Now we can easily find difference between payment of both jobs after tax = 39450-37605= $1845

Hence final answer is $1845.