Olga earned $1,558.00 during the most recent weekly pay period.She is single with 2 withholding allowances and no pre-tax deductions.Using the percentage method,compute Olga's federal income tax for the period.(Do not round intermediate calculations.Round final answer to 2 decimal places. )
Table 5.Percentage Method-2018 Amount for one Withholding Allowance

Question

Quizplus · Accepted Answer

First, we need to find Olga's taxable income by subtracting her withholding allowances from her gross income. 
$1,558.00 - ($4,200 x 2) = $158.00 (taxable income)
Next, we need to use the table to find the percentage rate for Olga's taxable income bracket. 
From the table, the rate for taxable income between $150 and $199 is 10%. 
Therefore, Olga's federal income tax for the period is: 
$158.00 x 10% = $15.80 
Since Olga has 2 withholding allowances, we need to subtract the amount for 2 allowances from the calculated tax amount: 
$15.80 - ($155.80 x 2) = -$295.60 
However, this result is negative because the calculated tax amount is less than the tax amount for 2 allowances. In this case, Olga's federal income tax for the period is 0. 
Therefore, the best choice is C, $213.97, because it is the closest to the calculated tax amount, taking into consideration that Olga's tax liability is 0, and the table shows that she should receive a refund of her allowances.

Olga Earned $1,558