Sonja is a United States citizen who has worked in Spain for the past 10 months. She received $5,000 a month as compensation. Her employer has offered to extend Sonja's contract to work in Spain for another 5 months at the same rate of pay. If she rejects the offer, she can return to the United States and receive the same salary. While working in Spain , she is subject to the Spain income tax, which is approximately 11% of her gross pay. The marginal tax rate on her income tax in the United States is 25%. Compare Sonja's after-tax income assuming she remains in Spain with her after-tax income if she returns to United States.
She receives 5,000 per month for 10 months = 50,000 + additional five months = 50,000 + 25,000 = 75,000 income.
While working in Spain, she is subject to Spain income tax of .11 of gross pay.
75,000 x 11% = ...
This solution compares Sonja's after-tax income assuming she remains in Spain with her after-tax income if she chooses to return to the United States. All calculations are given.