Question

Find your net pay year. net pay = gross pay – total deductions the deductions include: your chosen health insurance, the federal income tax you found above, a fica tax of 7.65%, and a state tax of 3%.

Answer 1

To calculate net pay, add the percentages of gross pay dedicated to Social Security, Medicare, and federal and state taxes to get the total deduction percentage. Then, multiply this percentage by the gross pay to find the total deductions, and subtract from the gross pay to find the net pay.

Step-by-step explanation:

The exercise involves calculating net pay after deducting federal, state, and FICA taxes from the gross pay. To determine the net pay, one must understand the percentages applied to the gross pay for each type of tax. The Social Security tax is 6.2%, while the Medicare tax is 1.45%. Along with these, an additional 15% is accounted for federal and state taxes combined.

First, you calculate the total percentage of the gross pay that goes towards FICA taxes by adding the percentages for Social Security and Medicare, which is 6.2% + 1.45% = 7.65%. Next, add the 15% federal and state taxes to get a total deductions percentage of 22.65%. After calculating the total amount of taxes by multiplying the gross pay by 22.65%, you can find the net pay by subtracting this tax amount from the gross pay.

To illustrate with an example, if one has a gross pay of $50,000 a year, the calculations would be as fol*ws:

1. Total FICA tax: 50,000 * 7.65% = $3,825
2. Total Federal and State taxes: 50,000 * 15% = $7,500
3. Total Deductions: $3,825 (FICA) + $7,500 (Federal and State taxes) = $11,325
4. Net Pay: $50,000 (Gross Pay) - $11,325 (Total Deductions) = $38,675

Therefore, the net pay after all deductions would be $38,675.