Assuming a FICA tax rate of 7.65% on the first $117,000 in wages 1.45% on amounts in excess of $117,000, and a federal income tax rate of 20% on all wages, what would be an employee's net pay for the year if he earned $180,000?

Question

Quizplus · Accepted Answer

First, we need to calculate the FICA taxes:
- On the first $117,000: 7.65% x $117,000 = $8,957.05
- On the remaining $63,000 ($180,000 - $117,000): 1.45% x $63,000 = $913.50
Total FICA taxes = $8,957.05 + $913.50 = $9,870.55

Next, we need to calculate the federal income taxes:
- 20% x $180,000 = $36,000

Finally, we can calculate the net pay:
Net pay = $180,000 - $9,870.55 - $36,000 = $134,129.45

Therefore, the best choice is D, which is closest to our calculated net pay of $134,129.45.

Assuming a FICA Tax Rate of 7