Bill Burne's earnings are subject to deductions for Social Security, Medicare, and FIT. To date his cumulative earnings are $110,000. This week Bill earns $1,200. Bill, who is married, is paid weekly and claims three exemptions. Assume the Social Security rate is 6.2% on $110,100 and 1.45% for Medicare. His net pay for the week is:

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Bill's earnings exceed the Social Security wage base of $110,100, so only $100 is subject to the 6.2% Social Security tax. Medicare tax is 1.45% on the full $1,200. FIT is calculated based on the IRS withholding tables for a married person with three exemptions. After calculating these deductions, his net pay is $1,069.39.

Bill Burne's Earnings Are Subject to Deductions for Social Security