An employee earns $5,500 per month working for an employer. The FICA tax rate fo

Question

An employee earns $5,500 per month working for an employer. The FICA tax rate for Social Security is 6.2% of the first $118,500 earned each calendar year and the FICA tax rate for Medicare is 1.45% of all earnings. The current FUTA tax rate is 0.6%, and the SUTA tax rate is 5.4%. Both unemployment taxes are applied to the first $7,000 of an employee’s pay. The employee has $182 in federal income taxes withheld. The employee has voluntary deductions for health insurance of $150 and contributes $75 to a retirement plan each month. What is the amount of net pay for the employee for the month of January? (Round your intermediate calculations to two decimal places.) Multiple Choice

$4,827.00

$4,672.25

$4,628.25

$4,386.25

$4,430.25

Explanation / Answer

Gross pay 5500 Less: Deductions Social Security 341 =5500*6.2% Medicare 79.75 =5500*1.45% Federal income taxes 182 Health insurance 150 Retirement plan 75 827.75 Net pay 4672.25 Option 2 is correct

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