Portia Grant is an employee who is paid monthly. For the month of January of the current year, she earned a total of 8,888. The FICA tax for social security is 6.2% of the first $128,400 of employee earnings each calendar year and the FICA tax rate for Medicare is 1.45% of all earnings. The FUTA tax rate of 0.6% and the SUTA tax rate of 5.4% are applied to the first $7,000 of an employee's pay. The amount of federal income tax withheld from her earnings was $1,474.77. Her net pay for the month is:

a. $7161.43
b. $6185.67
c. $6,566.00
d $6.61967
e. $5116.13

$6736.4

Explanations:

Net pay is the amount of money that is taken home by employees after all deductions have been deducted from gross pay, can be calculated using the formula below;

Net Pay = Gross Pay − Federal Income Tax − FICA-SS Tax − FICA-Medicare Tax

Net Pay = $8,888 − $1,474.77 − $547.96 − $128.87

= $6,736.4

FICA-SS Tax= $8,888 × 0.062 = $551.056

FICA-Medicare Tax =$8,888 × 0.0145 = $128.876

$6,733.298

Explanation:

Net Pay = Gross Pay - Federal Income Tax - FICA-SS Tax - FICA-Medicare Tax

Gross pay $8,888.00

Less: Federal Income Tax $1,474.77

FICA-SS Tax (6.2%×$8,888) $551.056

FICA-Medicare Tax (1.45%×$8,888) $128.876

Net Pay ($2154.702-$8,888) $6,733.298

Therefore her net pay for the month is:$6,733.298