Wolf Company is giving a net bonus check of $500 to all of its employees. If each of the payments are subject to FIT (22% supplemental rate) and FICA taxes, but no state taxes, the gross amount of each bonus check would be a. $662.75
b. $710.73
c. $663.75
d. $656.00
e. None of these choices are correct.

e. None of these choices are correct.

Explanation:

Calculation for the gross amount of each bonus check

Using this formula

Gross amount=Net bonus/(1-Supplemental rate-

FICA taxes)

Note that FICA taxes includes :

Social Security tax = 6.2%

Medicare tax on earnings=1.45%

Let plug in the formula

Gross amount=$500/(1-22%-6.2%-1.45%)

Gross amount=$500/(1-14.35%)

Gross amount=$500/0.1335

Gross amount= $3,745.32

Therefore the gross amount of each bonus check would be $3,745.32

Wolf Company is giving a net bonus check of $500 to all of its employees. If each of the payments are subject to FIT (22% supplemental rate) and FICA taxes, but no state taxes, the gross amount of each bonus check would be