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 $1,650, 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 $58,640 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.

Answer 1

Answer:

Net pay is $1,201.80

Explanation:

The salary is $58,640 annually

The semi monthly gross salary will be  ($58,640 / 24) = $2,443.33

The deductions will be:

Social security 6.2% = $151.49

Medicare 1.45% = $35.42

3% contribution to 401k = $73.30

Section 125 Plan = $25

Advance repayment ($1,650 / 2) = $825

Taxable Income is $2,443.33 - $73.30 - $25 = $2,345.03

Federal Income Tax 1.6% = $37.52

State Income Tax 4% = $93.80

Net pay is ($2,345.03 - $37.52 - $93.80 - $151.49 - $35.42 - $825) = $1,201.80