How much tax can be saved if John shifts $2,000 of income to his 18 year old dependent son? John is in the 25 percent tax bracket and his son has no other taxable income in 2013.
A)$1,000
B)$500
C)$400
D)$100

Question

Quizplus · Accepted Answer

John can save $500 in taxes by shifting $2,000 of income to his son. Since John is in the 25% tax bracket, he would save 25% of $2,000, which is $500. His son, having no other taxable income, would likely be in a lower tax bracket, potentially paying no tax on this income.

How Much Tax Can Be Saved If John Shifts $2,000