Joe's group-term life insurance, valued at $25, is imputed into his gross salary of $725. Joe's...

Joe's group-term life insurance, valued at $25, is imputed into his gross salary of $725. Joe's employer elects to not withold FIT from this benefit. Assuming FICA of 7.65% and FITW of 15%, what is his net pay?

a. $555.43 b. $583.88 c. $558.88 d. $555.13

Expert Solution

Answer: C

Gross pay = $725

FICA tax = (Gross pay + Insurance value) × 7.65%

= ($725 + $25) × 7.65%

= $750 × 7.65%

= $57.375

FITW = Gross pay × 15%

= $725 × 15%

= $108.75

Net pay = Gross pay – FICA tax – FITW

= $725 - $57.375 - $108.75

= $558.875

= $558.88 (rounded to 2 decimal places)

ekkarill92 answered 1 year ago

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