Your earnings in 2017 were $120 000,which is the 40 percent marginal tax bracket and 30 percent average tax bracket,in your province.How much would your taxes be reduced if you made the full RRSP contribution for this year (and had no additional RRSP room)?
A)$7803
B)$10 404
C)$26 010
D)$12 000

Question

Quizplus · Accepted Answer

The maximum RRSP contribution for 2017 is $26,010. If you contribute the full amount, your taxable income would be reduced to $120,000 - $26,010 = $93,990. In the 30% average tax bracket, this would result in a tax reduction of $7,803. However, since you are also in the 40% marginal tax bracket, you would benefit from an additional tax reduction of 40% x $26,010 = $10,404. Therefore, the total tax reduction would be $7,803 + $10,404 = $18,207. None of the other answer choices are correct.

Your Earnings in 2017 Were $120 000,which Is the 40