He must pay to have his car fixed is not deductible

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Reference no: EM131202553

Matteo, who is single and has no dependents, was planning on spending the weekend repairing his car. On Friday, Matteo’s employer called and offered him $125 in overtime pay if he would agree to work over the weekend. Matteo could get his car repaired over the weekend at Autofix for $90. If Matteo works over the weekend, he will have to pay the $90 to have his car repaired but he will earn $125. Assume Matteo pays tax at a flat 15 percent rate.

a-1. Strictly considering tax factors, should Matteo work or repair his car if the $90 he must pay to have his car fixed is not deductible?

a-2. Given the answer in a-1 above, by how much is Matteo better or worse off?

Reference no: EM131202553

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