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Payroll Accounting

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Julie Whiteweiler made $930 this week. Only social security (fully taxable) and federal income taxes attach to her pay. Whiteweiler contributes $100 each week to her company's 401(k) plan and has $25 put into her health savings account (nonqualified) each week. Her employer matches this $25 each week. Determine Whiteweiler's take-home pay if she is single and claims 2 allowances (use the wage-bracket method). Round your answers to the nearest cent.
Click here to access the Wage-Bracket Method Tables.
Gross pay $
HSA contributions
401(k) deductions
HI tax
Net pay $

  • Payroll Accounting -

    Answer is based on 2012 tax tables and rates. Use 2014 or 2013 tax tables and rates to get your answer.

    Late reply, but better than nothing. The answer is $663.45 for take-home pay.

    Step 1: Calculate FICA (OASDI & HI):
    Total wage subjected to FICA is $930. Why? Contributions to 401K is only exempted from Fed. Income Tax Withholding (FIT) not FICA. As for HSA contrib., it is exempted for both FICA and FIT. However, the plan is non-qualified, which means that $25 contributed by employee is taxable for both. The $25 matching from employer for HSA is excluded from income and income taxes.
    OASDI RATE 2012: 4.2% of $930; therefore, $39.06
    HI RATE 2012: 1.45% of $930; therefore, $13.49
    TOTAL FICA TAX: $52.55

    STEP 2: Calculate FIT:
    Total earnings subjected to FIT is ($930-100)= $830. Why? $100 contributions to 401k is exempted from FIT. HSA contrib. is unqualified.; therefore, contributions from employee is taxable. Using Wage Bracket Method 2012, the FIT is $89.

    STEP 3: Getting the Take-Home Pay answer:

  • Payroll Accounting -

    For the old or latest Wage Bracket Tables and Percentage Tables, please go to Publication 15 (YEAR). Input the year for the correct Pub. 15.

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