The annual gross income of Bernard is $53,200.
According to the statement
we have to find that the gross annual income which is subjected to the tax.
So, For this purpose, we have given information that is:
he has a wife, 4 children and 2 parents.
And the income required for all this is :
For himself = $3000
For wife = $2000
For 4 children = $4000*4 = $16000
For 2 parents = $5000 *2 = $10,000
And then
He paid an income tax of $1474 for the year 2018.
And
the gross tax payable for the first $40,000 is $550 and the tax rate for the rest is 7%.
Then
If tax for first 40,000 is 550 then it is clear that the annual amount is more than the 40,000.
So,
Left amount he pays as tax for more than 40,000 = 1474 - 550
Left amount he pays as tax for more than 40,000 = 924
An from given information:
The amount 924 behaves as the 7% of the income more than 40,000 then
924 = 7 /100 * x
here x is the income for which he pays 7% tax
then
924 = 7 /100 * x
92400 = 7x
x = 92400/7
x = 13,200.
The total gross income become = 40,000 + 13,200
The total gross income become = $53,200.
So, The annual gross income of Bernard is $53,200.
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Question:
Bernard paid an income tax of $1474 for the year 2018. Of his gross annual income, the amount he paid will not be subjected to income tax
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