Question

Yvette Bradbury is an account representative at Commerce Savings Bank, earning $45,600 annually, paid semimonthly. She contributes 3 percent of her gross pay to her qualified 401(k) plan on a pre-tax basis and has a pre-tax medical premium of $60.
What is her taxable income?

Answer 1

Answer:

taxable income per pay period = $1,637.50

Explanation:

first we must determine Yvette's pay per period. Since she is paid semimonthly, that means she gets paid twice a month = $42,000 / (12 x 2) = $42,000 / 24 pay periods = $1,750 per pay period

her 401 (k) contributions = $1,750 x 3% = $52.50

her medical premium = $60

taxable income per pay period = $1,750 - $52.50 - $60 = $1,637.50