Question

Frances Newberry is the payroll accountant for Pack-It Services of Jackson, Arizona. The employees of Pack-it Services are paid semimonthly. An employee, Glen Riley, comes to her on November 10 and requests a pay advance of $750, which he will pay back in equal parts on the November 15 and December 15 paychecks. Glen is married with eight withholding allowances and is paid $50,000 per year. He contributes 3% of his pay to a 401(k) and has $25 per paycheck deducted for a Section 125 plan. Compute his net pay on his November 15 paycheck. The state income tax rate is 4%. Use the Wage Bracket Method Tables for Income Tax Withholding in

What is net pay?

Answer 1

Computation of net pay of Glen
Particulars	Amount
Gross pay $50000 per year ($50000/12)/2	$2,083.33
Less: deductions
Contribution to 401(K) @3%	$62.50
Health insurance premium	$25.00
Taxble income	$1,995.83
Less: taxes
Federal income tax ($1275 - $79.40 and $720.83 - $86.50)	($165.90)
State wihholding tax ($1995.83*4%)	($79.83)
FICA Tax:
Social security tax @6.2%	($123.74)
Medicare tax @1.45%	($28.94)
Less: Advance payment	($375)
Net pay	$1,222.42
Note: As per 2018 Percentage Method Tables for Income Tax Withholding, below are the tax rate for Married person and semi monthly payroll
		$481 - $1275   $0.00 plus 10% inexcess of $481	$79.40
$1275 - $3706 $79.4 plus 12% inexcess of $1275 ($720.83*.12)	$86.50
	$165.90
Social Security and Medicare Tax for 2018 For social security, the tax rate is 6.2% each for the employee and employer, unchanged from 2017. The social security wage base limit is $128,400. The Medicare tax rate is 1.45% each for the employee and employer, unchanged from 2017. There is no wage base limit for Medicare tax.