Portia Grant is an employee who is paid monthly. For the month of January of the current year, she earned a total of $8,260. The FICA tax for social security is 6.2% of the first $118,500 of employee earnings each calendar year and the FICA tax rate for Medicare is 1.45% of all earnings. The FUTA tax rate of .6% and the SUTA tax rate of 5.4% are applied to the first $7,000 of an employee's pay. The amount of federal income tax withheld from her earnings was $1,325.17. Her net pay for the month is:
A)$6,422.71
B)$6,246.94
C)$6,302.94
D)$5,868.94
E)$7,194.11

Question

Quizplus · Accepted Answer

To calculate the net pay, subtract all applicable taxes from the gross pay:  1. Social Security tax: $8,260 * 6.2% = $512.12  2. Medicare tax: $8,260 * 1.45% = $119.77  3. FUTA tax: $7,000 * 0.6% = $42.00  4. SUTA tax: $7,000 * 5.4% = $378.00  5. Federal income tax: $1,325.17  Total deductions = $512.12 + $119.77 + $42.00 + $378.00 + $1,325.17 = $2,957.06  Net pay = $8,260 - $2,957.06 = $6,302.94

Portia Grant Is an Employee Who Is Paid Monthly