Nevan’s gross pay was $45,150 last year. The federal income tax withholding from his pay was 16% of his gross pay. Nevan determined the federal income tax he owes is $6,150. Which of the following is true? Nevan owes an additional $984 in federal tax.
Nevan owes an additional $1,074 in federal tax.
Nevan will receive a refund of $984.
Nevan will receive a refund of $1,074.

You multiply 45,150 and .16. (When it comes to this type of problem, move the decimal over 2 places to the left. So it starts out all the way to the right so you move it over 2 places to the left which gives you .16). The answer you should get is 7,224. Since he thinks that he owes 6,150, to see how much more he owes, subtract the 6,150 from 7,224. You should get 1,074 as your final answer.

ANSWER: Nevan owes an additional $1,074 in federal tax.