No matter if you are on salary, hourly, or commission, you have to pay Medicare and Social Security taxes on your gross income. This is also known as the Federal Insurance Contribution Act (FICA)....

I just need help with the question “Use the two pay stubs and 2018 tax table to calculate the net pay for each stub. You will need to search for











No matter if you are on salary, hourly, or commission, you have to pay Medicare and Social Security taxes on your gross income. This is also known as the Federal Insurance Contribution Act (FICA). Medicare tax is 1.45%. Social Security is 6.2%. Medicare Tax = Gross Income x 1.45% Social Security Tax = Gross Income x 6.2% Federal tax on your check stub is an estimation your employer makes based on a standard deduction and how many allowances you indicated on the W-4. Taxable income is your gross income minus the standard deduction. This reduce your taxable income. Taxable income* = Gross Income – Standard Deduction Federal taxes and state taxes are paid on your taxable income according to the tax bracket. Tax brackets are different according to your marital status. Tax brackets may change from year to year. The example below uses the 2018 tax bracket for a single person. Net Pay* = Gross Income – Medicare Tax – Social Security Tax – Federal Tax – State Tax *This does not include any Pre-Taxed deductions like health insurance or retirement. Example: Calculate your Net Pay using the Single tax bracket. Your gross income is $30,000. Medicare Tax = $30,000 x 0.0145 = $435 Social Security Tax = $30,000 x 0.062 = $1860 Standard Deduction = $12,000 (for 2018) Taxable Income = $30,000 – $12,000 = $18,000 Estimated Federal Taxes = .10($9,524) + .12 ($18,000 – $9,525) = $1969.40 Estimated State Taxes = .009 ($4,299) + .025 ($8,399 - $4,300) + .035 ($12,599 - $8,400) + .045($18,000 – $12,600) = $531.13 Net Pay = $30,000 – $435 – $1860 – $1969.40 – $531.13 = $25,204.47 Weekly pay = $25,204.72/52 = $484.70 Biweekly pay = $25,204.47/26 = $969.40 If your employer offers any pre-taxed deductions, the taxable income part of the model changes. Taxable Income = Gross Income – Standard Deduction – Pre-Taxed Deductions Estimate the yearly Net Pay if you have health insurance at $100 a month and you contribute $150 a month towards a retirement account. Federal Taxable Income Federal Tax Due 0 - $9,524 10% $9,525 - $38,699 12% $38,700 - $82,499 22% $82,500 + 24% You pay 10% on the first $9,524 you earn plus 12% on what you earn between $38,699 and $9,525, etc. AR State Taxable Income AR State Tax Due 0 - $4,299 0.9% $4,300 - $8,399 2.5% $8,400 - $12,599 3.5% $12,600 - $20,999 4.5% $21,000 - $35,099 6% $35,100 + 6.9% Use the two pay stubs and 2018 tax table to calculate the net pay for each stub. You will need to search for the 2018 tax bracket for married couples. Figure your net pay for the job you want after high school or college. Why do you think employers use software for payroll? Create spreadsheet models that can be used to calculate payroll for hourly pay and salary. In one of the models include health insurance and retirement options.