If George is 65 and in a combined marginal tax bracket of 42 percent,then
A)he can save $840 on his taxes if he applies his son's $2000 of tuition amount.
B)he can save $840 on his taxes from his $2000 RRSP contribution.
C)he can save $840 on his taxes from his $2000 medical expenses.
D)All of the above are correct.

Question

Quizplus · Accepted Answer

George can save $840 on his taxes from his $2000 RRSP contribution. The combined marginal tax bracket of 42% means that for every additional dollar of income earned, he will be taxed 42 cents. By contributing $2000 to his RRSP, he can reduce his taxable income, which in turn reduces the amount of taxes he has to pay. The tax savings from an RRSP contribution is equal to the contribution multiplied by the marginal tax rate. In this case, 42% of $2000 is $840. The other options given (using his son's tuition amount or medical expenses) may also result in tax savings, but they do not agree with the information given in the question.

If George Is 65 and in a Combined Marginal Tax