How much will Gareth owe the IRS based on his taxable income and withheld payroll tax?

• A. $850
• B. $1,000
• C. $500
• D. $1,500

Answer: (A)

To determine how much Gareth will owe the IRS, we look at his taxable income and the amount of payroll tax that has been withheld from his paychecks throughout the year.

If the correct answer is derived from calculating the balance between his total tax liability (based on his taxable income) and what has already been withheld, then Gareth's situation suggests that after accounting for his withholdings, he has a balance due of $850.

This calculation typically combines several factors, including total income, applicable tax rates, deductions, credits, and any taxes already paid via payroll withholding. The amount owed reflects the gap between what has been withheld and what he ultimately owes the IRS based on his taxable income. Thus, if the withheld amount is sufficient to cover part of his tax liability but leaves an outstanding balance of $850, this would indicate that the amount Gareth needs to pay is indeed $850.

This understanding of tax liability versus withheld taxes is a key aspect of tax preparation and filing, which individuals need to grasp to accurately assess their obligations to the IRS.