An employee earned $4,600 in February working for an employer. The FICA tax rate for Social Security is 6.2% of the first $118,500 earned during each calendar year and the FICA tax rate for Medicare is 1.45% of all earnings. The employee has $644 in federal income taxes withheld and has voluntary deductions for health insurance of $50 and contributes 10% of gross pay to a retirement plan each month. The employer pays the $200 remainder of the health insurance premium and an equal amount of contribution to the retirement fund. What is the amount of net pay for the employee for the month of February?
A)$3,094.10
B)$3,496.00
C)$3,604.10
D)$3,446.00
E)$2,634.10

Question

Quizplus · Accepted Answer

To calculate the net pay:  1. Calculate Social Security tax: $4,600 * 6.2% = $285.20  2. Calculate Medicare tax: $4,600 * 1.45% = $66.70  3. Calculate retirement contribution: $4,600 * 10% = $460  4. Total deductions: $285.20 (Social Security) + $66.70 (Medicare) + $644 (Federal tax) + $50 (Health insurance) + $460 (Retirement) = $1,505.90  5. Net pay: $4,600 - $1,505.90 = $3,094.10

An Employee Earned $4,600 in February Working for an Employer