Use the percentage method of withholding, a FICA rate of 6.2%, a Medicare rate of 1.45%, an SDI rate of 1%, and a state
withholding tax of 3.4%. One withholding allowance is $73.08 when paid weekly.
-Jessica Walker, physicist, earns $720 per week. She is married and claims 1 withholding allowance. Her deductions are FICA, Medicare, federal withholding, state disability insurance, state
Withholding, retirement contribution of $21.60, and a savings bond of $85. Find her net pay.
A)$554.70
B)$469.70
C)$454.64
D)$526.64

Question

Use the percentage method of withholding, a FICA rate of 6.2%, a Medicare rate of 1.45%, an SDI rate of 1%, and a state
withholding tax of 3.4%. One withholding allowance is $73.08 when paid weekly. 
-Jessica Walker, physicist, earns $720 per week. She is married and claims 1 withholding allowance. Her deductions are FICA, Medicare, federal withholding, state disability insurance, state
Withholding, retirement contribution of $21.60, and a savings bond of $85. Find her net pay.
A)$554.70 
B)$469.70 
C)$454.64 
D)$526.64

Quizplus · Accepted Answer

First, we need to calculate the total amount of deductions from Jessica's gross pay of $720 per week:

FICA: $720 x 6.2% = $44.64
Medicare: $720 x 1.45% = $10.44
State Disability Insurance: $720 x 1% = $7.20
State Withholding: $720 x 3.4% = $24.48
Retirement Contribution: $21.60
Savings Bond: $85.00

Total deductions: $194.76

Next, we need to calculate Jessica's taxable income:

Gross pay: $720
Minus: Withholding allowance (1 x $73.08) = $73.08
Minus: Total deductions = $194.76

Taxable income: $452.16

Now, we can use the percentage method to calculate the federal withholding. We first look up the tax table for weekly pay and 1 withholding allowance, which gives us a value of $45.40. We then calculate the withholding using the following formula:

Federal withholding = (Taxable income - $168) x 12% + $11.24

Federal withholding = ($452.16 - $168) x 12% + $11.24 = $33.28

Finally, we can calculate Jessica's net pay:

Net pay = Gross pay - Total deductions - Federal withholding

Net pay = $720 - $194.76 - $33.28 = $491.96

Therefore, the correct answer is B) $469.70.

Use the Percentage Method of Withholding, a FICA Rate of 6.2