Copyright © 2008, The McGraw-Hill Companies, Inc.
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Topic Key Ideas, Formulas, and Techniques Examples
Calculating Sales
Ta x , p. 378- Sales tax is a percent of the purchase price.
- Multiply the percent by the price to get the sales tax.
- Add calculated sales tax to the price to get total price
including tax. - Alternatively, use the formula: T P(1 r).
A sweater costs $42.95 and the sales
tax rate is 7^3 ⁄ 8 %. Calculate (a) the
amount of sales tax and (b) the total
price including tax.
(Example 9.1.2)Finding a Price
before Tax, p. 379- Use the formula T P(1 r).
- Use algebra to solve for P.
A souvenir shop sets all of its prices
to include 6.75% sales tax. For the
month of June, sales totaled $16,739.
How much sales tax is due on these
sales?
(Example 9.1.7)Calculating Taxable
Income, p. 386- Subtract $3,300 for each dependent who can be
claimed. - Subtract itemized tax deductible expenses, or
subtract the standard deduction if larger.
Luisa and Alfonso are a married
couple who had a joint income of
$68,579 in 2006. They have two
dependent children. They paid $3,450
in state and local taxes in 2006, and
gave $3,700 to charity. They have
no other tax-deductible expenses,
and no other special adjustments to
their taxable income. What was their
taxable income for 2006?
(Example 9.2.1)Calculating Total Tax,
p. 387- Use the IRS income tax tables for the appropriate
fi ling status.
Calculate the 2006 income tax for
Luisa and Alfonso (from Example
9.2.1). (Example 9.2.2)Calculating Tax
Withholding, p. 390- Income tax payments must be withheld from each
paycheck. - Withholding rates apply to gross income after
subtraction of nontaxable deductions and
exemption allowances. - Use the IRS withholding tables for the appropriate
fi ling status.
Erik is paid biweekly. He is married,
and claims three exemptions on his
tax return (one for himself, one for his
wife, and one for a dependent child).
After his contributions for health
insurance coverage and his 401(k)
are taken out, his gross taxable pay
is $1,535.06. How much should his
employer withhold for federal income
taxes?
(Example 9.2.5)Calculating FICA and
Self-Employment
Ta xes, p. 392- Taxes for Social Security and Medicare are
calculated as a percent of pay less nontaxable
deductions. - Employer and employee pay equal amounts.
- If self-employed, you pay both employer and
employee shares.
Suppose that Lesley has a gross
salary of $43,500 per year and is
paid biweekly. She pays $150 with
each paycheck for deductions for
health insurance or other benefi ts.
How much will be deducted from her
biweekly paycheck for FICA?
(Example 9.2.8)Assessed Value and
Uniform Assessment
Percent, p. 398- Property taxes are based on assessed value, not
actual market value. - Assessed values should be approximately a
consistent percent of market value. - Assessed Value (Uniform Assessment
Percent)(Market Value)
Suppose that the uniform
assessment rate is supposed to
be 25% in Boltonboro township.
What market value does a $53,502
assessment suggest?
(Example 9.3.2)CHAPTER 9
SUMMARY(Continued)