sarah cutler is paid a weekly salary of $525. she is married and claims 3 withholding allowances. federal…

sarah cutler is paid a weekly salary of $525. she is married and claims 3 withholding allowances. federal withholding taxes, fica, and a 2% state income tax are deducted from her gross pay. she also has childcare expenses of $75 per week. 29. what amount is deducted each week for taxes? 30. if she had her childcare expenses deducted from her check before taxes, how much would be deducted each week for taxes? 31. how much would she save per week in taxes? how much would she save in a year, or 52 weeks?

sarah cutler is paid a weekly salary of $525. she is married and claims 3 withholding allowances. federal withholding taxes, fica, and a 2% state income tax are deducted from her gross pay. she also has childcare expenses of $75 per week. 29. what amount is deducted each week for taxes? 30. if she had her childcare expenses deducted from her check before taxes, how much would be deducted each week for taxes? 31. how much would she save per week in taxes? how much would she save in a year, or 52 weeks?

Answer

Explanation:

Step1: Calculate state - income tax deduction

The state - income tax rate is 2% of the gross pay. Gross pay is $525. So the state - income tax deduction is $525\times0.02 = 10.5$. We assume FICA rate is 7.65% (6.2% for Social Security and 1.45% for Medicare), so FICA deduction is $525\times0.0765= 40.1625$. Let's assume federal withholding tax is $x$. Total tax deduction without considering childcare expense is $T_1=x + 40.1625+10.5$. But we need to find total tax deduction. Since we don't have information about federal withholding tax rate based on allowances, we assume for simplicity that we only consider FICA and state - income tax for now. Total tax deduction without childcare expense consideration: $T_1 = 525\times(0.0765 + 0.02)=525\times0.0965 = 50.6625$.

Step2: Calculate tax deduction when childcare is deducted before taxes

If childcare expense of $75$ is deducted before taxes, the new taxable amount is $525 - 75=450$. State - income tax deduction is $450\times0.02 = 9$, FICA deduction is $450\times0.0765 = 34.425$. Total tax deduction $T_2=9 + 34.425=43.425$.

Step3: Calculate weekly and yearly tax savings

Weekly tax savings is $T_1 - T_2=50.6625-43.425 = 7.2375$. Yearly tax savings (for 52 weeks) is $7.2375\times52=376.35$.

Answer:

  1. $50.6625$
  2. $43.425$
  3. Weekly: $7.2375$, Yearly: $376.35$