Question

Jeff Jones earns $1,200 per week. He's married and claims four withholding allowances. The social security rate is 6.2% on $118,500, and Medicare is 1.45%. Each paycheck, his employer also deducts $42.50 for health insurance. What's his net pay?

Answer 1

$1068.95

Explanation:

Gross Pay = $1200

Health Insurance deducted = $42.50

Taxable Pay = 1200 - 42.50

= $1157.50

Social security rate = 6.2%

=
`(6.2)/(100)`

= 0.062 (converted into decimal)

Social security Tax = Taxable Pay * Social security rate

= 1157.50 *0.062

= 71.765

= $71.77 (rounded off to the nearest hundredth)

Medicare Tax rate = 1.45%

=
`(1.45)/(100)`

= 0.0145 (converted into decimal)

Medicare Tax = Taxable Pay * Medicare Tax rate

= 1157.50 * 0.0145

= $16.78

Net Pay = Gross Pay - Health Insurance deducted - Social security Tax - Medicare Tax

= 1200 - 42.50 - 71.77 - 16.78

= 1200 - (42.50 + 71.77 + 16.78)

= 1200 - 131.05

= $1068.95