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 intermediate calculations.Round your final answer to 2 decimal places. )
Table 5.Percentage Method-2018 Amount for one Withholding Allowance
Federal Income tax using percentage method

A)$3,653.05
B)$3,613.28
C)$3,974.60
D)$3,885.14

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 intermediate calculations.Round your final answer to 2 decimal places. )
Table 5.Percentage Method-2018 Amount for one Withholding Allowance
Federal Income tax using percentage method

A)$3,653.05 
B)$3,613.28 
C)$3,974.60 
D)$3,885.14

Quizplus · Accepted Answer

Step 1: Calculate gross pay per pay period

$135,000 / 24 pay periods = $5,625 gross pay per pay period

Step 2: Calculate total pre-tax deductions per pay period

$150 + $25 = $175 total pre-tax deductions per pay period

Step 3: Calculate taxable income per pay period

$5,625 - $175 - ($5,625 x 0.03) = $5,167.50 taxable income per pay period

Step 4: Calculate federal income tax withholding per pay period using the percentage method

From the table, the amount for one withholding allowance is $155.80

$5,167.50 / $155.80 = 33.1426 ..... Round up to 34

$3,135.60 + ($5,167.50 - $4,150) x 0.24 = $3,613.28 federal income tax withholding per pay period

Step 5: Calculate net pay per pay period

$5,625 - $175 - ($5,625 x 0.03) - $300 - $3,613.28 = $1,361.72 net pay per pay period

Therefore, the best choice is B because it is the calculated net pay per pay period rounded to 2 decimal places.

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