Final answer:
To calculate Erin Lane's Federal Income Tax per month, subtract the total deductions from her gross monthly earnings and apply the tax rate. The deductions include Social Security and Medicare taxes. Once the taxable income is determined, the Federal Income Tax can be calculated using the specified tax rate.
Step-by-step explanation:
To calculate the amount of Erin Lane's Federal Income Tax per month, we need to determine her taxable income first. To do this, we subtract the total deductions from her gross monthly earnings. The deductions include Social Security and Medicare taxes.
Let's calculate the deductions:
Social Security deduction = Gross monthly income × 6.2%
Medicare deduction = Gross monthly income × 1.45%
Total deductions = Social Security deduction + Medicare deduction
Once we have the deductions, we can calculate the Federal Income Tax as follows:
Federal Income Tax = (Gross monthly income - Total deductions) × Tax rate
The Tax rate is the percentage of the taxable income that needs to be paid as Federal Income Tax.
Plugging in the values provided:
Erin Lane's Gross monthly income = $2,975
Social Security deduction = $2,975 × 6.2% = $184.55
Medicare deduction = $2,975 × 1.45% = $43.21
Total deductions = $184.55 + $43.21 = $227.76
Taxable income = $2,975 - $227.76 = $2,747.24
Assuming a Tax rate of 30.5%, the Federal Income Tax per month would be:
Federal Income Tax = $2,747.24 × 30.5% = $838.12