Question

Frances Newberry is the payroll accountant for Pack-it Services of Jackson, Arizona. The employees of Pack-It Services are paid semimonthly. An employee, Glen Riley, comes to her on November 6 and requests a pay advance of $1,600, which he will pay back in equal parts on the November 15 and December 15 paychecks. Glen is married with eight withholdings allowances and is paid $58,160 per year. He contributes 3 percent of his pay to a 401(k) and has a $25 per paycheck deducted for a Section 125 plan.

Compute his net pay on his November 15 paycheck. The state income tax is 2.88 percent. Use the Wage Brack Method Tables for Income Tax Withholding in Appendix C. (Round your intermiediate calculations and final awnser to 2 decimal places)

Answer 1

Social Security Tax = 6.20%

Medicare tax=1.45%

.

Computation

Wage= $58160

We divide over 24 payment per year = $58160/24 = 2423.33

Deduction

6.20% Social Security Tax = $150.25

1.45% medicare tax= $35.14

3%401K=72.70

Section 125 plan $25.00

Advance repayment $800 (1600/2)

Taxable Income =$2423.33 - $72.70 - $25 = $2325.63

Federal income tax = $24

State income tax 2.88% = $66.98

Net Pay = $$2325.63 - $24 - $66.98 - $150.25 - $35.14 - $800 = $1249.26

Net Pay =  $1249.26