Question

An employee earns $5,750 per month working for an employer. The FICA tax rate for Social Security is 6.2% of the first $128,400 earned each calendar year and the FICA tax rate for Medicare is 1.45% of all earnings. The current FUTA tax rate is 0.6%, and the SUTA tax rate is 5.4%. Both unemployment taxes are applied to the first $7,000 of an employee's pay. The employee has $192 in federal income taxes withheld. The employee has voluntary deductions for health insurance of $160 and contributes $80 to a retirement plan each month. What is the amount of net pay for the employee for the month of January? (Round your intermediate calculations to two decimal places.)

(A) $4,832.12
(B) $4,878.12
(C) $4,567.62
(D) $4,961.50
(E) $4,521.62

Answer 1

Option (B) is correct.

Step-by-step explanation:

Net Pay for the employee:

= Wages Per Month - Federal Income Taxes Withheld - FICA Social Security - FICA Medicare - Health Insurance - Health Insurance

= $5,750 - $192 - $356.5 - $83.38 - $160 - $80

= $4,878.12

Therefore, the amount of net pay for the employee for the month of January is $4,878.12.