Andrew's mother asked maria whether chris owns or leases his cars. maria replied that chris leases his cars and that the sport utility vehicle cost $40,000 new and his wife's van was about $25,000.
andrew's mother did a brief calculation, which found that chris' car lease payments were costing him more than $10,000 per year! adding the cost of insurance, which is probably about $3,000 because chris is a male driver under the age of 26, the cars alone cost about $13,000 a year. then she added the $23,700 for the house and the $4,000 in credit card payments and found that chris spends $40,700 per year for these items alone. in addition, chris' student loans probably cost him another $4,000 per year. she asked maria how much chris makes per year and found that he earns $60,000, which maria considered to be very good pay.
andrew's mother explained that $60,000 is the gross amount and chris doesn't get to take all of that home since there are many deductions made to his earnings. after federal and state income tax, social security tax and benefits such as health and life insurance and pension contributions, she felt that chris would be lucky to keep two-thirds of that amount. two-thirds of $60,000 is $40,000, which means that chris is spending nearly his entire take-home pay for the house, the cars, the student loans and the credit card bills. that leaves nothing left for groceries or for buying clothes or for paying doctor bills not covered by insurance or even the gas for the cars.
if a company advertises a job starting at $26,000 per year, what is this amount?
a. it is the gross amount minus social security contributions.
b. it is the gross amount before taxes and benefits are taken out.
c. it is the amount that the employee takes home.
d. it is the gross amount minus federal income tax.