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Marilyn has a biweekly gross pay of $810 and claims 3 federal withholding allowances. Marilyn has all of the following deductions from her gross pay: federal tax from the following table
Social Security tax that is 6.2% of her gross pay
Medicare tax that is 1.45% of her gross pay
state tax that is 21% of her federal tax
Determine how Marilyn’s net pay will be affected if she increases her federal withholding allowances from 3 to 4.
a. Her net pay will increase by $15.00.
b. Her net pay will decrease by $15.00.
c. Her net pay will increase by $18.15.
d. Her net pay will decrease by $18.15.
Answer:
c. Her net pay will increase by $18.15.
Step-by-step explanation:
From the given information; we can compute the deduction on her gross pay.
given that;
gross pay = $810
Social Security tax that is 6.2% of her gross pay
i.e
Medicare tax that is 1.45% of her gross pay
state tax that is 21% of her federal tax
we are given that her federal withholding allowance is 3
%
The state tax that is 0.63% of her gross pay
The total deducted amount of Marilyn’s gross pay = 50.22 + 11.745 + 5.103 = 67.068 of his gross pay
= 810 - 67.068 = 742.932
However; the question proceeds by saying ; if she increases her federal withholding allowances from 3 to 4; we should Determine how Marilyn’s net pay will be affected.
SO;
If the federal withholding allowance is 4
Then;
%
The state tax that is 0.84% of her gross pay
=
Thus; from the foregoing :
c. Her net pay will increase by $18.15.