E8-9 - a) Reg Rate is $40. Ovt Rate is ($40.00 * 1.75) =...

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Unformatted text preview: a) Reg Rate is $40. Ovt Rate is ($40.00 * 1.75) = $70.00. So...(40hrs * $40) + (20hrs * $70) = $3,000 Gross Pay. b) Since our prior gross pay was $58k and current gross pay is $3,000 this is still under the $100k mentioned in the problem above. Therefore, we just need to tax 6% on the current gross pay amt. If the prior gross pay had been $98k, then we would only need to tax 6% on the difference ($100k - $98k = $2k * 6%) but that's not the case for this problem. Therefore... Social Sec. Tax = $3,000 - 6% = $180 Medicare Tax = $3,000 - 1.5% = $45 Federal Income Tax = $714 So...$3,000 - $180 - $45 - $714 = $2,061.00 is the net pay. Keep in mind we had to do a special calculation for Social Sec. because the "6.0% on earnings up to $100,000" stipulation. Medicare was a straight fwd calculation and Federal Income tax was provided to us. ...
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