Lab 21: Income Tax

Front

What is income tax?

Back

Income tax is a tax imposed by the government on individuals' earnings, calculated as a percentage of their income.

Front

How do you calculate income tax?

Back

To calculate income tax, multiply the annual income by the tax rate (as a decimal). For example, if the income is $40,000 and the tax rate is 20%, the tax is $40,000 x 0.20 = $8,000.

Front

If Vickie makes $40,000 and pays 20% in income tax, how much tax does she pay?

Back

$8,000

Front

What is the formula to calculate sales tax?

Back

Sales tax = Price of the item x Sales tax rate (as a decimal).

Front

If the price of a laptop is $899 and the sales tax rate is 7%, what is the sales tax?

Back

$62.93

Front

What does it mean when sales tax is added to the price?

Back

It means that the total cost of the item will be the original price plus the calculated sales tax.

Front

What is a tax rate?

Back

A tax rate is the percentage at which an individual or corporation is taxed on their income or sales.

Front

If Mary earns $50,000 and the tax rate is 15%, how much tax does she pay?

Back

$7,500

Front

What is the difference between income tax and sales tax?

Back

Income tax is based on earnings, while sales tax is based on the purchase price of goods and services.

Front

How do you convert a percentage to a decimal for tax calculations?

Back

To convert a percentage to a decimal, divide the percentage by 100. For example, 20% becomes 0.20.