Question

Lindsey Vater’s weekly gross earnings for the week ended March 9 were $840, and her federal income tax withholding was $151.20. Assuming the social security tax rate is 6% and Medicare tax is 1.5% of all earnings, what is Lindsey's net pay? For interim computations, carry amounts out to two decimal places. Round your final answer to two decimal places.

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Answer 1

To calculate Lindsey's net pay, subtract the deductions and taxes from her gross earnings: $840 - $50.40 - $12.60 - $151.20 = $625.80.

Step-by-step explanation:

To calculate Lindsey's net pay, we need to subtract the deductions and taxes from her gross earnings. The social security tax rate is 6%, so the amount deducted for social security tax is 0.06 * $840 = $50.40.

The Medicare tax rate is 1.5%, so the amount deducted for Medicare tax is 0.015 * $840 = $12.60.

Additionally, her federal income tax withholding is already given as $151.20.

To find Lindsey's net pay, we subtract the deductions and taxes from her gross earnings:

Net Pay = Gross Earnings - Social Security Tax - Medicare Tax - Federal Income Tax Withholding

Net Pay = $840 - $50.40 - $12.60 - $151.20 = $625.80

Therefore, Lindsey's net pay is $625.80.