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)$40.00
B)$48.00
C)$38.00
D)$39.00

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) ?
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) $40.00 B) $48.00 C) $38.00 D) $39.00

A)$40.00 
B)$48.00 
C)$38.00 
D)$39.00

Quizplus · Accepted Answer

To determine the method that results in the lowest taxable income, we need to compare the amount withheld for each option.

Option 1: Contributing 2.5% to the 401(k) plan 
2.5% of $680.20 = $17.01 
Taxable income = $680.20 - $17.01 = $663.19

Option 2: Contributing $25 to the 401(k) plan 
Taxable income = $680.20 - $25 = $655.20

Now, we can use the tax table to determine the federal income tax withheld for each option:

For a single filer claiming 3 allowances with taxable income of $663, the federal income tax withheld is $38.

For a single filer claiming 3 allowances with taxable income of $655, the federal income tax withheld is also $38.

Therefore, the best choice would be contributing $25 to the 401(k) plan which results in the lowest taxable income and the same federal income tax withheld as the alternative option. The amount withheld for federal income tax would be $38.

The correct answer is C) $38.00.

Andie Earned $680