Question

Lauren is a waitress at the Red Rose Café. Her Y-T-D earnings as of September 30 are $22,800. Please answer the following question using the following information. mce FICA OASDI- 6.2% on the first $128,400 te FICA MEDICARE- 1.45% 22,800 FfSIT- 7% eacher FIT-See Table $25-given by teache Round to the nearest cent. 1. Red Rose requires that all of its wait staff report their tips daily at the end of their shift. For the week ended October 19 Lauren reported tips of $87.50 for a 20 hour week. Calculate her net pay.

Answer 1

Net pay is the amount remaining after the deduction of the aggregate of all withholding from the gross pay.

Deductions:

FICA OASDI = 87.50 × 6.2% = 5.425 = 5.43 rounded

FICA Medicare = 87.50 × 1.45% = 1.26875 = 1.27 rounded

State Income Tax (SIT) = 87.50 × 7% = 6.125 = 6.13 rounded

Federal Income Tax (FIT) = 25 given

Hence,

Ne pay = Gross pay – (FICA OASDI + FICA Medicare + SIT + FIT)

            = 87.50 – (5.43 + 1.27 + 6.13 + 25)

            = 87.50 – 37.83

            = $ 49.67 (Answer)

Note: Year-to-date earnings (Y-T-D) ($22,800) should not be considered here, since all the adjustments for taxes are already over with that earning.