Bella Chen’s weekly gross earnings for the week ended October 20 were $2,600, and her federal income tax withholding

Bella Chen’s weekly gross earnings for the week ended October 20 were $2,600, and her federal income tax withholding was $554.76. Assuming the social security rate is 6% and Medicare is 1.5% of all earnings, what is Chen’s net pay?


Answer:







Total wage payment…………………………………………… $2,600.00
Less: Federal income tax withholding………………… $554.76
Social security tax ($2,600 × 6%)………………… 156.00
Medicare tax ($2,600 × 1.5%)…………………… 39.00 749.76
Net pay………………………………………………………… $1,850.24



Bella Chen’s weekly gross earnings for the present week were $2,600. Chen has two exemptions. Using the wage bracket withholding table in Exhibit 3 with a $70 standard withholding allowance for each exemption, what is Chen’s federal income tax withholding?


Answer:











Total wage payment……………………………………………………………… $2,600.00
One allowance (provided by IRS)…………………………………………… $70.00
Multiplied by allowances claimed on Form W-4…………………………… × 2 140.00
Amount subject to withholding……………………………………………… $2,460.00
Initial withholding from wage bracket in Exhibit 3……………………… $ 327.40
Plus additional withholding: 28% of excess over $1,648*……………… 227.36
Federal income tax withholding……………………………………………… $ 554.76
*($2,460 – $1,648) × 28%