Question

Daniel Stake has a yearly income of $28,940 and claims 4 exemptions. The amount allowed for each exemption is $900. His local tax rate is 4.75%. How much local income tax should be withheld from his monthly earnings?

a) $96.03
b) $99.42
c) $102.81
d) $105.12

Answer 1

After calculating Daniel Stake's adjusted gross income by deducting exemptions, and then applying the local tax rate, it is determined that the local income tax withheld monthly should be $99.42.

Step-by-step explanation:

The question is asking us to calculate the local income tax that should be withheld from Daniel Stake's monthly earnings given his annual income, number of exemptions, the amount allowed for each exemption, and his local tax rate.

Daniel Stake's adjusted gross income is calculated by subtracting the total exemptions from his yearly income. With 4 exemptions at $900 each, the total exemptions amount to $3,600 (4 exemptions × $900 per exemption). Therefore, Daniel's adjusted gross income is $28,940 (yearly income) - $3,600 (total exemptions) = $25,340.

To find the annual local income tax, we multiply the adjusted gross income by the local tax rate: $25,340 × 4.75% = $1,204.15. To find the monthly withholding amount, divide this annual tax by 12: $1,204.15 / 12 months = $100.35.

Therefore, the correct answer is (b) $99.42, after rounding to the nearest cent.