Alan pays income tax, a universal social charge (USC) and pay-related social insurance (PRSI) on his gross wages. His gross weekly wages are €510. (a) Alan pays income tax at the rate of 20%. He has weekly tax credits of €63. How much income tax does he pay? (b) Alan pays the USC at the rate of 2% on the first €193, 4% on the next €115 and 7% on the balance. Calculate the amount of USC Alan pays. (c) Alan also pays PRSI. His total weekly deductions amount to €76.92. How much PRSI does Alan pay?

Leaving Cert Mathematics Financial Maths: Alan pays income tax, a universa

Alan pays income tax, a universal social charge (USC) and pay-related social insurance (PRSI) on his gross wages - Leaving Cert Mathematics - Question 1 - 2012

Question 1

Alan pays income tax, a universal social charge (USC) and pay-related social insurance (PRSI) on his gross wages. His gross weekly wages are €510. (a) Alan pays inc... show full transcript

Worked Solution & Example Answer:Alan pays income tax, a universal social charge (USC) and pay-related social insurance (PRSI) on his gross wages - Leaving Cert Mathematics - Question 1 - 2012

Step 1

Calculate Income Tax Paid

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Answer

Determine the total income tax: $\text{Total Tax} = \text{Gross Wages} \times \text{Income Tax Rate}$
$\text{Total Tax} = €510 \times 0.20 = €102$
Subtract the tax credits from the total tax to find the income tax paid:
$\text{Tax Paid} = \text{Total Tax} - \text{Tax Credits}$
$\text{Tax Paid} = €102 - €63 = €39$

Thus, Alan pays €39 in income tax.

Step 2

Calculate USC Amount

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Answer

Calculate the USC for each portion:
- For the first €193:
  $€193 \times 0.02 = €3.86$
- For the next €115:
  $€115 \times 0.04 = €4.60$
- For the remaining amount (total gross wages minus the first two portions):
  Remaining amount = €510 - (€193 + €115) = €202
  $€202 \times 0.07 = €14.14$
Sum up the USC amounts:
$\text{USC Total} = €3.86 + €4.60 + €14.14 = €22.60$

Therefore, Alan pays €22.60 in USC.

Step 3

Calculate PRSI Amount

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Answer

Start with the total weekly deductions:
$\text{Total Deductions} = €76.92$
Subtract the income tax and USC from the total deductions to find PRSI:
$\text{PRSI} = \text{Total Deductions} - (\text{Income Tax} + \text{USC})$
$\text{PRSI} = €76.92 - (€39 + €22.60) = €15.32$

Thus, Alan pays €15.32 in PRSI.

Alan pays income tax, a universal social charge (USC) and pay-related social insurance (PRSI) on his gross wages - Leaving Cert Mathematics - Question 1 - 2012

Worked Solution & Example Answer:Alan pays income tax, a universal social charge (USC) and pay-related social insurance (PRSI) on his gross wages - Leaving Cert Mathematics - Question 1 - 2012

Calculate Income Tax Paid

Calculate USC Amount

Calculate PRSI Amount

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