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Gary’s gross income is €2450 per month (i.e - Junior Cycle Mathematics - Question 4 - 2016

Question 4

Gary’s gross income is €2450 per month (i.e. before tax is deducted). He pays tax at a rate of 20% on his gross income. (a) Work out Gary’s gross tax per month. Ga... show full transcript

Worked Solution & Example Answer:Gary’s gross income is €2450 per month (i.e - Junior Cycle Mathematics - Question 4 - 2016

Step 1

Work out Gary’s gross tax per month.

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Answer

To calculate Gary’s gross tax, we first determine the total amount of tax he is required to pay at a rate of 20% on his gross income of €2450.

Using the formula:

ext{Gross Tax} = ext{Gross Income} imes ext{Tax Rate} = €2450 imes 0.20 = €490

Thus, Gary’s gross tax per month is €490.

Step 2

Work out Gary’s net income per month (i.e. after tax is deducted).

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Answer

To calculate Gary’s net income, we need to subtract both the gross tax and any applicable tax credit from his gross income.

First, we determine the taxable amount after applying the tax credit:

ext{Net Income} = ext{Gross Income} - ext{Gross Tax} + ext{Tax Credit} = €2450 - €490 - €275

This simplifies to:

ext{Net Income} = €2450 - €490 - €275 = €1685

Therefore, Gary’s net income per month is €1685.

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