Trey Morgan is an employee who is paid monthly. For the month of January of the current year, he earned a total of $4,538. The FICA tax for social security is 6.2% of the first $118,500 earned each calendar year, and the FICA tax rate for Medicare is 1.45% of all earnings for both the employee and the employer. The amount of federal income tax withheld from his earnings was $680.70. His net pay for the month is:
A)$3,510.14
B)$3,857.30
C)$4,190.84
D)$4,538.00
E)$3,162.98

Question

Quizplus · Accepted Answer

The correct answer is A because the net pay is calculated by subtracting the FICA tax, Medicare tax, and federal income tax from the gross pay. The FICA tax for social security is 6.2% of the first $118,500 earned each calendar year, which is $7,323 for January. The FICA tax rate for Medicare is 1.45% of all earnings, which is $65.59 for January. The total FICA tax is $7,388.59. The federal income tax withheld is $680.70. The net pay is $4,538 - $7,388.59 - $680.70 = $3,510.14.

Trey Morgan Is an Employee Who Is Paid Monthly