Question 1070102: Tara is saving for an overseas trip. Her taxable income is usually about $20000. She estimates that she will need $5000 for the trip, so she is going to do some extra work to raise the money. How much extra will she need to earn in order to have $5000 after tax?
(If taxable income is $0-$18200, there is no tax. If taxable income is $18201-$37000, there is $0.19 tax for each $1 over $18200.)
Answer by Theo(13342)   (Show Source):
You can put this solution on YOUR website! she normally makes 20,000.
she will need an additional 5,000 income to pay for her trip.
the tax rate for any income over 18,201 to 37,000 is .19 for every dollar.
that's a tax rate of 19%.
the extra 5000 she needs is after tax money.
let x equal the before tax money she will need.
formula becomes:
x - .19 * x = 5000
combine like terms to get .81 * x = 5000
divide both sides of the equation by .81 to get:
x = 5000 / .81 = 6172.839506.
that's now much additional she has to earn in order to get 5000 additional money to spend after taxes.
to confirm, you could do the following:
she now earns 20,000.
she is not taxed on the first 18,200.
she will be taxed on 20,000 - 18,200 = 1800.
the tax will be .19 * 1800 = 342.
her net income after taxes will be 20,000 - 342 = 19,658.
she earns an extra 6172.839506.
her gross income now becomes 26172.839506.
she is taxed on 26172.839506 - 18200 = 7972.839506.
the tax is .19 * 7972.839506 = 1514.839506.
her net income is now 26172.839506 - 1514.839506 = 24,658.
her net income before the additional revenue was 19,658.
her net income now is 24,658.
her net income now is 24,658 - 19,658 = 5,000 more than it was before she earned the additional income.
solution looks good.
since all the additional income was in the same tax bracket, it was not necessary to go through all this to confirm the solution was correct.
the net income from the additional revenue of 6172.839506 could have simply been calculated as follows:
additional gross income = 6172.839506
tax on additional gross income = .19 * 6172.839506 = 1172.839506.
additional net income is 6172.839506 - 1172.839506 = 5000.
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