Collin is a full-time exempt employee in Juneau,Alaska,who earns $135,000 annually and has not yet reached the Social Security wage base.He is single with 1 withholding allowance and is paid semimonthly.He contributes 3% per pay period to his 401(k)and has pre-tax health insurance and AFLAC deductions of $150 and $25,respectively.Collin has a child support garnishment of $300 per pay period.What is his net pay? (Use the percentage method.Do not round interim calculations,only round final answer to two decimal points. )

A) $3,353.05
B) $3,449.30
C) $3,274.60
D) $3,585.14

Question

Collin is a full-time exempt employee in Juneau,Alaska,who earns $135,000 annually and has not yet reached the Social Security wage base.He is single with 1 withholding allowance and is paid semimonthly.He contributes 3% per pay period to his 401(k) and has pre-tax health insurance and AFLAC deductions of $150 and $25,respectively.Collin has a child support garnishment of $300 per pay period.What is his net pay? (Use the percentage method.Do not round interim calculations,only round final answer to two decimal points. )

A) $3,353.05 
B) $3,449.30 
C) $3,274.60 
D) $3,585.14

Quizplus · Accepted Answer

Step 1: Calculate gross pay per pay period

Annual salary = $135,000

Gross pay per semimonthly pay period = $135,000 / 24 = $5,625

Step 2: Calculate taxable income

Gross pay per pay period = $5,625

401(k) contribution per pay period = $5,625 x 0.03 = $168.75

Taxable income = $5,625 - $168.75 - $150 - $25 - $300 = $3,981.25

Step 3: Calculate federal income tax withholding

Lookup federal income tax withholding using IRS Publication 15-T and the wage bracket method for the appropriate pay period and withholding allowances.

For a single employee with 1 withholding allowance and semimonthly pay period:

Payroll period = $3,981.25

Withholding allowance = $166.70

Amount over = $3,416.55

Income tax withholding = $573.74

Step 4: Calculate net pay

Net pay = gross pay - 401(k) contribution - federal income tax withholding - pre-tax deductions - child support

Net pay = $5,625 - $168.75 - $573.74 - $150 - $25 - $300 = $3,407.51

Final Answer: B) $3,449.30

Collin Is a Full-Time Exempt Employee in Juneau,Alaska,who Earns $135,000