Question

Frances Newberry is the payroll accountant for Pack-It Services of Jackson, Arizona. The employees of Pack-It Services are paid semimonthly. An employee, Glen Riley, comes to her on November 6 and requests a pay advance of $850, which he will pay back in equal parts on the November 15 and December 15 paychecks. Glen is married with eight withholding allowances and is paid $50,960 per year. He contributes 3 percent of his pay to a 401(k) and has $25 per paycheck deducted for a Section 125 plan. Required: Compute his net pay on his November 15 paycheck. The applicable state income tax rate is 2.88 percent. Use the Wage Bracket Method Tables for Income Tax Withholding in Appendix C. (Round your intermediate calculations and final answer to 2 decimal places.) Net pay

Answer 1

December 2019

Social Security Tax = 6.20%

Medicare tax=1.45%

Computation:

Wage= $ 50,960

We divide over 24 payment per year = $50960/24=$2123.33

Deduduction:

6.20% Social Security Tax = $131.65

1.45% medicare tax= $30.79

3%401K= $63.70

Section 125 plan $25.00

Advance repayment $425 (850/2)

Taxable Income =$2123.33 - $63.70 - $25=$2034.63

Federa income tax = $24

State income tax 2.88% = $58.60

Net Pay = $2034.63-$24-$58.60-$131.65-$30.79-$425 = $1364.59