Mr. Ortega earns a monthly salary of $4,000. Based on Mr. Ortega's Form W-4, the tax tables require withholding $450 per month for income taxes. Mr. Ortega has authorized his employer to deduct $190 per month for medical insurance and $15 per month for a charitable contribution to the Humane Society. Assume a FICA tax rate of 6%, a Medicare tax rate of 1.5%, and an Unemployment tax rate of 6% on the first $7,000 of income. Based on this information, Mr. Ortega's net pay for January 31, Year 1 is
A)$3,000.
B)$2,805.
C)$4,000.
D)$3,045.

Question

Quizplus · Accepted Answer

First, we need to calculate the total taxes and deductions for Mr. Ortega:

Income tax withholding: $450
FICA tax (6% of $4,000): $240
Medicare tax (1.5% of $4,000): $60
Unemployment tax (6% of $4,000): $240
Medical insurance deduction: $190
Charitable contribution deduction: $15
Total taxes and deductions: $1,195

Now, we can calculate Mr. Ortega's net pay for the month:

Monthly salary: $4,000
Minus taxes and deductions: -$1,195
Net pay: $2,805

Therefore, the correct answer is D) $2,805.

Mr Ortega Earns a Monthly Salary of $4,000