I don't get when to use the 7.65% and then the 1.45%
How do you calculate the following below...given:
number of hours worked-952
Hourly pay- $120.50
______________________________
A. Gross pay for the year
B. FICA Taxes
C. Federal Income Tax
D. Net Pay (A-B-C=_ ) right?
Question 2: (Use 1.45%...? I don't get this)
Number of hours worked-2,200
Hourly Pay- $72.12
A. Gross pay for the year
B. FICA Taxes
C. Federal Income Tax
D. Net Pay (A-B-C=_)
To calculate the answers to the questions, you need to understand how to use percentages to calculate amounts.
Let's start with the first question.
1. Gross pay for the year: To calculate the gross pay for the year, multiply the number of hours worked (952) by the hourly pay rate ($120.50). So, Gross pay = 952 * 120.50.
2. FICA Taxes: FICA taxes consist of Social Security and Medicare taxes. In this case, Social Security tax is 7.65% and Medicare tax is 1.45% of your gross pay. To calculate the FICA taxes, first, find the total FICA tax rate by adding 7.65% and 1.45% (which equals 9.10%). Then, multiply the gross pay (calculated in step 1) by 9.10% to get the FICA taxes.
3. Federal Income Tax: The Federal Income Tax rate depends on your tax bracket. In this case, the question does not provide the tax bracket or any other information related to it. To calculate the Federal Income Tax, you need to know the tax rates for your specific tax bracket and apply it to your gross pay.
4. Net Pay: To calculate your net pay, subtract the FICA taxes (calculated in step 2) and Federal Income Tax (calculated in step 3) from the gross pay (calculated in step 1). Net Pay = Gross Pay - FICA Taxes - Federal Income Tax.
For the second question:
1. Gross pay for the year: Multiply the number of hours worked (2,200) by the hourly pay rate ($72.12) to get the gross pay.
2. FICA Taxes: Follow the same procedure as in the first question to calculate FICA taxes using the percentage given (1.45%).
3. Federal Income Tax: As mentioned earlier, the tax rate depends on your tax bracket. You need to know the specific rate for your bracket to calculate the Federal Income Tax.
4. Net Pay: Subtract the FICA taxes (calculated in step 2) and Federal Income Tax (calculated in step 3) from the gross pay (calculated in step 1) to get the net pay.
Note: The actual calculation of taxes can also be affected by additional factors such as exemptions, deductions, and credits. Consulting a tax professional or using tax software is recommended for accurate calculations.