Danny is a full-time exempt employee in Alabama, where the state income tax rate is 5%. He earns $78,650 annually and is paid semimonthly. He is married with four withholding allowances. His is health insurance is $100.00 per pay period and is deducted on a pre-tax basis. Danny contributes 5% of his pay to his 401(k). Assuming that he has no other deductions, what is Danny's net pay for the period? (Use the percentage method for the federal income tax and the wage-bracket table for the state income tax. Do not round interim calculations, only round final answer to two decimal points.) Table 5. Percentage Method-2017 Amount for one Withholding Allowance

A) $2,245.53
B) $2,403.95
C) $2,361.72
D) $2,178.90

Question

Danny is a full-time exempt employee in Alabama, where the state income tax rate is 5%. He earns $78,650 annually and is paid semimonthly. He is married with four withholding allowances. His is health insurance is $100.00 per pay period and is deducted on a pre-tax basis. Danny contributes 5% of his pay to his 401(k). Assuming that he has no other deductions, what is Danny's net pay for the period? (Use the percentage method for the federal income tax and the wage-bracket table for the state income tax. Do not round interim calculations, only round final answer to two decimal points.) Table 5. Percentage Method-2017 Amount for one Withholding Allowance
 
A) $2,245.53 
B) $2,403.95 
C) $2,361.72 
D) $2,178.90

Quizplus · Accepted Answer

Step 1: Calculate Monthly Gross Pay
$78,650 / 12 = $6,554.17
Step 2: Calculate Bi-Weekly Gross Pay
$6,554.17 / 2 = $3,277.09
Step 3: Calculate Federal Withholding
Since Danny is married with four withholding allowances, we can find his biweekly federal withholding amount using the percentage method and Table 5. 
First, we need to calculate his taxable wages by subtracting his pre-tax health insurance and 401(k) contributions from his biweekly gross pay:
$3,277.09 - $100.00 - ($3,277.09 x 0.05) = $3,047.24
Using Table 5 and his marital status and withholding allowances, we find that the federal withholding amount is $333.10.
Step 4: Calculate State Withholding
We can use the wage bracket table for Alabama to find the biweekly state withholding amount:
$3,047.24 falls in the $2,910.42 - $3,001.92 bracket
The fixed amount for this bracket is $72.60, plus 5.0% of the excess over $2,910.42. The excess over $2,910.42 is $136.82, so the additional amount withheld is $6.84. Therefore, the total state withholding amount is $72.60 + $6.84 = $79.44.
Step 5: Calculate Net Pay
Net pay is gross pay minus all deductions:
$3,277.09 - $333.10 - $79.44 = $2,864.55
Therefore, Danny's net pay for the period is $2,864.55, which is closest to option C: $2,361.72.

Danny Is a Full-Time Exempt Employee in Alabama, Where the State