Suppose a student is in the 10% tax bracket. Once he begins college, he can choose a $3200 deduction or a $1000 credit to offset tuition and fees. Which option will reduce his tax bill by the greater amount? What is the difference in his savings between the two options?

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Mathematics

3 November, 16:48

Suppose a student is in the 10% tax bracket. Once he begins college, he can choose a $3200 deduction or a $1000 credit to offset tuition and fees. Which option will reduce his tax bill by the greater amount? What is the difference in his savings between the two options?

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Answers (1)

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Britney Grimes · Answer 1

To establish the scheme that will reduce the tax Bill, we will proceed as follows;

amount deductible in option one will be:

10/100*3200

=$320

amount deductible in option two will be:

10/100*1000

=$100

Option 2 will reduce his tax.

The amount of taxed will be reduced by (320-100) = $220

b] The difference between his savings will be:

difference=option1-option2

=3200-1000

=$2200