Assuming a FICA tax rate of 7.65% on the first $117000 in wages 1.45% on amounts in excess of $117000 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 $180000 for the year?

Question

Quizplus · Accepted Answer

The FICA tax on the first $117000 is: 
0.0765 x 117000 = $8,953.50

The FICA tax on the remaining $63000 is: 
0.0145 x 63000 = $913.50

The total FICA tax is: 
$8,953.50 + $913.50 = $9,867

The federal income tax is: 
0.2 x 180000 = $36,000

The net pay would be: 
$180000 - $9,867 - $36,000 = $134,133

Therefore, the best choice is D.

Assuming a FICA Tax Rate of 7