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).
Enter deductions beginning with a minus sign (-). Round your calculations and final answers to the nearest cent.
To determine Julie Whiteweiler's take-home pay, we need to calculate her taxable income and then deduct the applicable taxes and contributions.
1. Calculate taxable income:
Julie's salary per week is $930.
She contributes $100 to her 401(k) plan each week, resulting in an adjusted salary of $930 - $100 = $830.
She also has $25 put into her health savings account each week, but this is nonqualified and not deducted from her taxable income.
2. Find the federal income tax:
We'll use the wage-bracket method, which takes into account the tax brackets based on income and allowances.
Since Julie is single and claims 2 allowances, we need to find the appropriate wage bracket from the IRS Publication 15-T (Employer's Tax Guide).
- Look up the wage bracket table for a single individual claiming 2 exemptions.
- Find the range that includes Julie's taxable income of $830.
- Determine the corresponding tax rate and subtract any additional taxes due to the wage bracket.
For example, let's say the tax rate for her income range is 12%. This means her federal income tax is $830 x 0.12 = $99.60.
3. Calculate social security tax:
Social security tax is a fixed rate of 6.2% on the first $142,800 of earnings for the year 2021.
Since Julie's salary is $830 per week, we'll assume her annual salary is about $42,000 (52 weeks x $830).
Therefore, her social security tax is $42,000 x 0.062 = $2,604.
4. Calculate take-home pay:
Take-home pay is the amount left after deducting social security tax and federal income tax from the adjusted salary.
Adjusted salary = $830
Social security tax = $2,604
Federal income tax = $99.60
Take-home pay = Adjusted salary - Social security tax - Federal income tax
= $830 - $2,604 - $99.60
= -$1,873.60
It seems that Julie's take-home pay is in the negative range (-$1,873.60), which indicates a calculation error or an unexpected scenario. Double-check the data and calculations to determine the correct take-home pay.