Andie earned $680.20 during the most recent weekly pay period.She is single with 3 withholding allowances and needs to decide between contributing 2.5% and $25 to her 401(k) plan.If she chooses the method that results in the lowest taxable income,how much will be withheld for Federal income tax (based on the following table)?
A) $58.00
B) $60.00
C) $48.00
D) $47.00

Question

Andie earned $680.20 during the most recent weekly pay period.She is single with 3 withholding allowances and needs to decide between contributing 2.5% and $25 to her 401(k) plan.If she chooses the method that results in the lowest taxable income,how much will be withheld for Federal income tax (based on the following table)? 
A) $58.00 
B) $60.00 
C) $48.00 
D) $47.00

Quizplus · Accepted Answer

To find out the best choice that results in the lowest taxable income, we need to calculate the total amount contributed to the 401(k) plan using both options.

Option 1: Contributing 2.5%
2.5% of $680.20 = $17.01

Option 2: Contributing $25
$25 < 2.5% of $680.20
So, we choose option 2.

Total taxable income = $680.20 - $25 = $655.20

Using the given table, the Federal income tax taken out for a single person with 3 allowances earning $655.20 per week is $48.00.

Therefore, the answer is C) $48.00.

Andie Earned $680