Question

mattola company is giving each of its employees a holiday bonus of $100 on December 15 (a non payday) the company wants each employee's check to be $100. The supplemental tax percent is used. A. What will the gross amount of each bonus if each employee pays a state income tax of 2.8 % (besides the other payroll taxes) and B. What would the net amount of each bonus check be if the company did not gross-up the bonus?

Answer 1

A. the gross amount will be 102,8 dollars

B. The net amount will be 97,2 dollars

Explanation: if the company wants every employee to recieve 100 dollars after taxes they need to add the supplemental tax percent (1+0,028)

If the company is not withholding the tax then the employees will recieve a check of 10o dollar but have to pay 2,8 dollars as a state income tax, then the net amount is 97,2 dollars