Question

An employee elects to have 6% of her pay deferred into the company's 401K. Her salary is $52,000 per year and she is paid biweekly. How much must be withheld for federal income tax, social security and medicare tax relating to this contribution?

Answer 1

All amounts are in $

Tax year is taken as 2020 & Single taxpayer

Gross pay per biweekly period = 52,000/26 = 2,000

Social security = 2,000 x 6.2% = 124

Medicare = 2,000 x 1.45% = 29

401(k) contribution = 2,000 x 6% = 120

Federal tax withholding = 161 or 281

(161 is Standard witholding and 281 is witholding amount if form w4, step 2 checkbox is ticked)

Net pay = 2,000 - 124 - 29 - 120 - 161 = 1,566

(If witholding is 281, then net pay is 1446)

Note :

We assumed that there are no allowances

Wagebracket tables are used instead of percentage method.