2.1 Federal Income Tax (FIT)
Brittany's gross pay is $345. She is single and claims 1 allowance. How many allowances does she claim?
1
One allowance
Brittany earns $45,990 annually. She is married. The state tax rate is 4%. What amount is the total exemptions?
$4,000
Married = $4,000
What is Step 1 to find the graduated state income tax?
Find the taxable wages
What is the tax rate for Medicare?
1.45%
If your company pays 65% of the cost, how much will the employee pay?
(Clue: What is step 1?)
35%
(100%-35%=25%)
Kyle's weekly gross pay is $598. He is married and claims one allowance. What is his marital status? (Single or married?)
Married
Kyle earns $67,560 per year. He is single and claims 2 dependents. The state tax rate is 3.5%. What is the total exemptions amount?
$6,000
Single = $2,000
Each Dependent = $2,000
2,000 + 2,000 + 2,000 = 6,000
What is Step 2 to find graduated state income tax?
Find the annual tax withheld
What is the tax rate for Social Security?
6.2%
The annual cost of insurance is $7,000. Employer pays 60%. How much does the employee pay?
(Clue: What is step 2?)
$2,800
Josh is married and claims 2 allowances. His gross pay is $283. What amount is withheld for FIT?
$1
Josh earns $39,780 annually. He is single and claims 1 dependent. The state tax rate is 2%. How much is withheld for state income tax?
$715.60
39,780 - 4,000 = 35,780
35,780 x 2% = 715.60
What is Step 3 to find the graduated state income tax?
Find the tax withheld per pay period
Josh's gross pay for the week is $687. How much is deducted from his paycheck for Social Security?
$42.59
687 x 6.2% = 42.59
Josh's group medical insurance coverage costs $5,490 a year. The company pays 70% of the cost. How much is deducted each month from his paycheck for medical insurance?
$137.25
Kyle earns $467 weekly. He is single and claims 1 allowance. What amount is withheld for FIT?
$46
Kyle earns $32,000 annually. He is married and claims 1 dependent. The state tax rate is 5%. What amount is withheld for state income tax?
$1,300
32,000 - 6,000 = 26,000
26,000 x 5% = 1,300
Ricky’s annual gross pay is $21,000. He is paid biweekly. He is single and claims 1 dependent. How much does his employer deduct from his biweekly paychecks for state income tax?
First $1,000 : 1.5%
Over $2,000 : 3.0%
What is Step 1? (Show your work!)
21,000 - 4,000 = 17,000
$12.91
890 x 1.45% = 12.905 = 12.91
Kyle’s company pays 80% of the cost for group health insurance. His medical coverage costs $6,200 a year. How much is deducted from his biweekly paycheck for medical insurance?
$47.69
Sandy earns $499 a week. She is married and claims 2 allowances. What amount is withheld for FIT?
$22
Sandy earns $76,500 annually. She is married and claims 2 dependents. The state tax rate is 4.5%. What amount is withheld for state income tax?
$3,082.50
76,500 - 8,000 = 68,500
68,500 x 4.5% = 3,082.50
Ricky’s annual gross pay is $21,000. He is paid biweekly. He is single and claims 1 dependent. How much does his employer deduct from his biweekly paychecks for state income tax?
First $1,000 : 1.5%
Over $2,000 : 3.0%
What is the LAST STEP we need to do here?
Divide by 26.
Divide annual tax withheld by 26 (biweekly).
Sandy's gross pay for the week is $750. How much is deducted from her weekly paycheck for Social Security and Medicare? What are the total deductions?
Total Deductions = $57.38
750 x 6.2% = 46.50
750 x 1.45% = 10.88
Sandy's group health insurance costs $8,100 a year. The company pays 65% of the cost. How much is deducted each month from her pay check?
$236.25