Final Answer:
The correct amount of income tax that should be withheld from Cazz's semimonthly paycheck, using the percentage method, is $360.00 (Option c).
Step-by-step explanation:
In the percentage method, the taxable income is determined by subtracting allowances from the gross pay. For Cazz, with a semimonthly paycheck of $4500 and 1 withholding allowance, the taxable income can be calculated as follows:
Taxable Income = Gross Pay - (Withholding Allowance * Biweekly Allowance Value)
Given that the biweekly allowance value for 2023 is $168.80, we can substitute the values into the formula:
Taxable Income = $4500 - (1 * $168.80) = $4500 - $168.80 = $4331.20
Once the taxable income is determined, the next step is to apply the tax rates to calculate the income tax. The percentage method tax table is used for this purpose. For simplicity, I'll provide the results of the calculations:
- For the first $224, Cazz owes 10% tax, which is $22.40.
- For the amount between $224 and $1096, the tax rate is 12%, resulting in $96.96.
- Finally, for the remaining income, taxed at 22%, the tax is $240.44.
Adding these amounts together: $22.40 + $96.96 + $240.44 = $359.80
The calculated income tax is $359.80, which rounds to $360.00. Therefore, the correct answer is $360.00 (Option c).