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 $128,400 and 1.45% for Medicare. His net pay for the week is (use percentage table in handbook to calculate FIT):

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Bill's earnings for the week are $1,200. Social Security tax is 6.2% on earnings up to $128,400, so $1,200 * 6.2% = $74.40. Medicare tax is 1.45%, so $1,200 * 1.45% = $17.40. To calculate FIT, use the percentage table for a married person with three exemptions. Subtract these taxes from $1,200 to find the net pay.

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