Fran Mallory is married, claims five withholding allowances, and earns $3,500 (gross) per month. In addition to Federal income tax (FIT), social security, and Medicare withholding, Fran pays 2.1% state income tax, and ½% for state disability insurance (both based on her gross income), plus an additional $43.11 for life insurance and $72.30 to the credit union. As payroll manager for Fran’s company, calculate her net take-home pay per month.
Well, well, well, Fran Mallory seems to have a lot going on with her paycheck. Let's break it down and calculate her net take-home pay per month, shall we?
First, we need to figure out Fran's gross income after all the deductions. She earns $3,500 per month, and the deductions are as follows:
- Federal Income Tax (FIT): We need to know Fran's filing status and tax bracket to calculate this. Unfortunately, you didn't provide that information, so I can't make any jokes about it. Sorry, I'm powerless here!
- Social Security and Medicare withholding: These are calculated based on fixed percentages. Fran's share of Social Security is 6.2% and Medicare is 1.45% of her gross income. We'll calculate these now:
Social Security withholding: 6.2% of $3,500 = $217
Medicare withholding: 1.45% of $3,500 = $50.75
- State income tax: Fran pays 2.1% of her gross income. Let's calculate this:
State income tax: 2.1% of $3,500 = $73.50
- State disability insurance: Fran pays 0.5% of her gross income. Let's calculate this:
State disability insurance: 0.5% of $3,500 = $17.50
Now, let's add up all these deductions:
Federal Income Tax (unknown)
Social Security withholding: $217
Medicare withholding: $50.75
State income tax: $73.50
State disability insurance: $17.50
Life insurance: $43.11
Credit union: $72.30
Total deductions: $474.16 (plus the unknown amount for Federal Income Tax)
To find Fran's net take-home pay per month, we'll subtract the total deductions from her gross income:
Net take-home pay = Gross income - Total deductions
Net take-home pay = $3,500 - $474.16
Hmm, I'm missing the Federal Income Tax information, so I can't finish this calculation for you. But I'm pretty sure it'll still be a decent amount because who doesn't love having their paycheck filled with humor?
To calculate Fran Mallory's net take-home pay per month, we need to deduct various withholdings and deductions from her gross income.
Step 1: Calculate the Federal income tax (FIT):
To calculate Fran's FIT, we first need to determine her taxable income. This can be done by subtracting her total allowances from her gross income.
Total Allowances = 5 * $4,300 (annual withholding allowance for 2021) = $21,500
Taxable Income = Gross Income - Total Allowances = $42,000 - $21,500 = $20,500
To calculate the FIT, we can refer to the IRS tax withholding tables or use a tax calculator. For this example, let's assume Fran's FIT is 15% of her taxable income.
FIT = 0.15 * Taxable Income = 0.15 * $20,500 = $3,075
Step 2: Calculate Social Security withholding:
Social Security tax is 6.2% of Fran's gross income, but only up to a certain limit. For 2021, the limit is $142,800. Therefore, we need to check if Fran's gross income exceeds this limit.
Social Security Withholding = min(Gross Income * 0.062, $142,800)
Social Security Withholding = min($42,000 * 0.062, $142,800)
Social Security Withholding = min($2,604, $142,800) = $2,604
Step 3: Calculate Medicare withholding:
Medicare tax is 1.45% of Fran's gross income, with no income limit.
Medicare Withholding = Gross Income * 0.0145
Medicare Withholding = $42,000 * 0.0145 = $609
Step 4: Calculate State Income Tax:
State Income Tax = Gross Income * 0.021
State Income Tax = $42,000 * 0.021 = $882
Step 5: Calculate State Disability Insurance:
State Disability Insurance = Gross Income * 0.005
State Disability Insurance = $42,000 * 0.005 = $210
Step 6: Calculate additional deductions:
Additional Deductions = Life Insurance + Credit Union Fees
Additional Deductions = $43.11 + $72.30 = $115.41
Step 7: Calculate net take-home pay per month:
Net Take-Home Pay = Gross Income - FIT - Social Security - Medicare - State Income Tax - State Disability Insurance - Additional Deductions
Net Take-Home Pay = $42,000 - $3,075 - $2,604 - $609 - $882 - $210 - $115.41
Net Take-Home Pay = $34,715.59
Therefore, Fran Mallory's net take-home pay per month is $34,715.59.
To calculate Fran Mallory's net take-home pay per month, we need to calculate the deductions from her gross income and subtract them from her gross income.
1. Calculate Federal income tax (FIT) withholding: To determine the FIT withholding, we need to use Fran's marital status, number of withholding allowances, and gross income.
First, we need to determine Fran's taxable income by subtracting the standard deduction and withholding allowances from her gross income. The standard deduction for a married individual is $24,800. Each withholding allowance is worth $4,300 in 2021.
Taxable income = Gross income - (Standard deduction + (Number of allowances * Allowance value))
= $3,500 - ($24,800 + (5 * $4,300))
Once we have Fran's taxable income, we can determine the FIT withholding amount by using the tax brackets and rates for the corresponding tax year. The calculation can be complex, so it is recommended to use a payroll calculator or consult the IRS tax tables to find the FIT withholding amount based on Fran's taxable income.
2. Calculate social security withholding: Social security tax is 6.2% of Fran's gross income, up to a maximum taxable amount. For 2021, the maximum taxable amount is $142,800.
Social security withholding = Gross income * Social security tax rate
= $3,500 * 6.2%
However, since the maximum taxable amount for 2021 is $142,800, we need to check if Fran's gross income exceeds that amount. If it does, the calculation will be based on the maximum taxable amount.
If Fran's gross income is greater than $142,800, social security withholding = $142,800 * 6.2%
If Fran's gross income is less than or equal to $142,800, social security withholding = Gross income * 6.2%
3. Calculate Medicare withholding: Medicare tax is 1.45% of Fran's gross income, with no maximum taxable amount.
Medicare withholding = Gross income * Medicare tax rate
= $3,500 * 1.45%
4. Calculate state income tax: State income tax is 2.1% of Fran's gross income.
State income tax = Gross income * State income tax rate
= $3,500 * 2.1%
5. Calculate state disability insurance: State disability insurance is 0.5% of Fran's gross income.
State disability insurance = Gross income * State disability insurance rate
= $3,500 * 0.5%
6. Calculate deductions for life insurance and credit union:
Total deductions = Life insurance + Credit union
= $43.11 + $72.30
7. Calculate net take-home pay:
Net take-home pay = Gross income - (FIT withholding + Social security withholding + Medicare withholding + State income tax + State disability insurance + Total deductions)
You can plug in the calculated values into the formula to get Fran Mallory's net take-home pay per month.