Answer:
FOR PLATO USERS.
I earn $15 per hour for 20 hours a week, I will earn $15,600 yearly. I can claim my exemptions as noted on my W-4 form. The Internal Revenue Service announces the allowances per exemptions every year. The current allowance for one exemption for a single person is $3,950. For a spouse, I can claim another exemption of $3,950. I can also claim exemptions for any dependents at $3,950 each.
Suppose my contribution to a 401(k) retirement plan is 10 percent:
$15,600 – $1,560 = $14,040
I am single, so I claimed one exemption on my W-4 form, which I submitted to my employer:
$14,040 – $3,950 = $10,090
Thus, my gross income (minus exemptions and deductions) is $10,090.
Now I will calculate the federal income tax, Social Security, and other withholdings based on $10,090. My employer withholds money for federal tax, Social Security tax, and Medicare tax. The federal income tax brackets for 2015 are as follows:
Tax Rate Taxable Income Levels
10% $0–$9,225
15% $9,226–$37,450
25% $37,451–$90,750
28% $90,751–$189,300
33% $189,301–$411,500
35% $411,501–$413,200
39.60%
Above $413,200
The tax bracket for my income is 15 percent. However, I am not taxed 15 percent on the entire amount. I will be taxed 10 percent for the first $9,225 dollars earned. Then, I will be taxed 15 percent on the remaining amount:
10 percent of 9,225 = $922.50
15 percent of ($10,090 – $9,225) = $129.75
Total income tax = $1,522.25
Thus, my income minus federal tax ($10,090 – $1,522.25) is $9,037.75.
The Social Security tax is 6.2 percent, and the Medicare tax is 1.45 percent. These taxes are calculated based on my gross income:
6.2 percent of $15,600 = $967.20
1.45 percent of $15,600 = $226.20
Thus, my net pay will be: $9,037.75 – (967.20 + 226.20) = $7,844.35.