7 Mariam has recently been promoted and suspects that he is

7. Mariam has recently been promoted, and suspects that he is now in a higher tax bracket. If his new financial data are: Annual Salary Monthly benefits from bank account Annual expenses 400,000 $250 $75,000 Calculate the following: a. Taxable income for the year b. Federal tax for Mariam (use table provided in class notes) c. Net income

Solution

a) Taxable income for the year = Annual salary + Monthly benefits from bank account

Taxable income for the year = $ 400,000 + $ 250 * 12

Taxable income for the year = $ 403,000

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b) The federal tax for Mariam is calculated using the tax rate for the corresponding wage bracket from the table.

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C) Net Income = Taxable income for the year - taxes paid