For this year, assume the OASDI FICA tax rate is 6% of the first $60,000 of each

Question

For this year, assume the OASDI FICA tax rate is 6% of the first $60,000 of each employee's yearly earnings and the Medicare FICA tax is 1% of each employee's yearly earnings. Prior to November 2, William had earned gross pay of $58,000. During the week ended November 8, William earned $2,500. During the week, in addition to FICA taxes, William had federal income taxes of $600, state income taxes of $110, and union dues of $10 withheld from his pay.

Calculate the dollar amount of William's net pay for the week ended November 8.

$1,605

$1,635

$1,640

$1,780

a.

$1,605

b.

$1,635

c.

$1,640

d.

$1,780

Explanation / Answer

Answer: Option b. $1,635

Gross pay $ 2500 Less: Deductions OASDI FICA (6% x $2000) 120 Medicare FICA tax (1% x $2500) 25 Federal income taxes 600 State income taxes 110 Union dues 10 Total deductions 865 Net pay $ 1635

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