Question

Assuming a FICA tax rate of 7.65% on the first $127,200 in wages, 1.45% on amounts in excess of $127,200, and a federal income tax rate of 20% on all wages, what would be an employee's net pay for the year if he earned $206000 for the year

Answer 1

$154524

Step-by-step explanation:

If a federal tax rate is 20% on all wages then we subtract that amount from the total wage of $206000 for the year

20% from $206000 is $41200

$206000 - $41200 = $164800

We have deducted the federal tax rate and got the amount $164800

After we apply the FICA tax rate of 7.65% on the amount $127200 we get

7.65% of $127200 is $9730,8 so the first amount we have to remember is

$127200 - $9370,8 = $117469,2

Regarding the amount that excess $127200 that amount stands at

$164800 - $127200 = $37600

We apply the 1.45% rate to the amount $37600

1.45% of the $37600 is $545,2 so the second amount we have to remember is

$37600 - $545,2 = $37054,8

We now simply add the two calculated amounts

$117469,2 + $37054,8 = $154524

So the net pay for the year is $154524