Final answer:
To determine the employee's biweekly net pay after all deductions, subtract state and federal taxes, FICA taxes, and the employee's share of health insurance from the annual salary. Then, divide the annual net pay by 26 to get the biweekly figure.
Step-by-step explanation:
To calculate the employee's biweekly net pay, we need to consider various deductions including federal income tax, state income tax, FICA taxes (Social Security and Medicare), as well as health insurance premiums. Initially, we need to determine the taxable income by applying the state tax deductions for being married and having two dependents. Then, we can calculate each deduction and tax based on the taxable income. Once all the deductions have been determined, we subtract them from the annual salary to find the annual net pay, and finally, we divide by the number of pay periods in a year to find the biweekly net pay.
Here are the steps in detail:
- Calculate taxable income: Start with the annual gross income of $48,260, subtract the state tax deduction of $5,000 for being married, and $2,500 for each dependent. This gives us the state taxable income.
- Calculate state income tax: Multiply the state taxable income by the state tax flat rate of 6%.
- Calculate federal income tax: Assume 15% of gross annual income to account for federal and state taxes.
- Calculate FICA taxes: Social Security is 6.2% and Medicare is 1.45% of the annual income.
- Calculate health insurance premium: The employer pays 80% of a $6400 policy, while the employee pays the remaining 20%.
- Determine net pay: Total all deductions and subtract from the annual salary to find the annual net pay, then divide by 26 (the number of biweekly periods) to find the biweekly net pay.