Question

If a person's gross pay is $7,000 and they have 2 total exemptions, and the state income tax rate is 2%, what is the state income tax withheld?

A) $136
B) $140
C) $142

Answer 1

The state income tax withheld from a gross pay of $7,000 at a 2% tax rate is $140, assuming exemptions are zero-valued or are not provided with specific values to subtract from the gross income.

Step-by-step explanation:

If a person's gross pay is $7,000 they have 2 total exemptions, and the state income tax rate is 2%, we need to calculate the state income tax withheld. To do this, we first need to find out what amount is subject to tax after accounting for exemptions. However, since the information provided does not include a specific dollar amount for each exemption, we have two approaches:

1. Assume the exemptions are factored into a taxable income, which would be incorrect here as there's no way to determine what the taxable income is without further info.
2. Calculate the state income tax directly from the gross income if exemptions are not given specific values, which results in State income tax = Gross Pay × State Tax Rate = $7,000 × 2% = $140.

The correct answer is likely B) $140, assuming exemptions are either zero-valued or already subtracted from the gross pay.