Question

Ms. Planner is in the 25% tax bracket and itemizes on her tax return. She plans to make a charitable contribution of $12,000 to her alma mater this year. The net cost of this contribution to Ms. Planner is:

Answer 1

Answer:

Net cost  = $9000

Explanation:

Given data:

Tax is 25%

charitable contribution is $12,000

from the data given above tax saving can be calculated

Tax saving = 25% of $12,000

Tax saving  $=  0.25 \times 12000$

Tax saving = $3,000

As contribution is considered to be deductible amount so Net cost is calculated as

Net cost = 12000 - 3000

Net cost  = $9000