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 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 intermediate calculations.Round your final answer to 2 decimal places. )
Table 5.Percentage Method-2018 Amount for one Withholding Allowance

A)$2,245.53
B)$2,403.95
C)$2,414.53
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 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 intermediate calculations.Round your final answer to 2 decimal places. )
Table 5.Percentage Method-2018 Amount for one Withholding Allowance

A)$2,245.53 
B)$2,403.95 
C)$2,414.53 
D)$2,178.90

Quizplus · Accepted Answer

Step 1: Calculate gross pay per pay period
$78,650 / 24 pay periods = $3,277.08

Step 2: Calculate federal withholding tax
- Determine withholding allowances:
  4 allowances x $4,150.00 = $16,600.00
- Subtract allowance amount from gross pay:
  $3,277.08 - $16,600.00 = -$13,322.92 (negative number means no federal withholding tax)
- Multiply taxable income by percentage for the excess:
  $13,322.92 x 0.24 = $3,197.90
- Add back the flat amount:
  $3,197.90 + $1,305.00 = $4,502.90 (federal withholding tax)

Step 3: Calculate state withholding tax
- Use wage-bracket table for semi-monthly pay period:
  $3,277.08 falls in bracket $3,253 - $3,277
- Determine amount for one withholding allowance:
  $11.60
- Calculate state withholding tax:
  4 allowances x $11.60 = $46.40
- Add back health insurance deduction:
  $46.40 + $100.00 = $146.40 (state withholding tax)

Step 4: Calculate 401(k) contribution
- Multiply gross pay by percentage:
  $3,277.08 x 0.05 = $163.85 (401(k) contribution)

Step 5: Calculate net pay
- Subtract all deductions from gross pay:
  $3,277.08 - $4,502.90 - $146.40 - $163.85 = $464.93 (net pay)
- Round to the nearest cent:
  $464.93 = $464.93

Therefore, the best choice is C, $2,414.53.

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