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Business Math 11 - Payroll (Calculating Take Home Pay with Dependents)
Walter Evans pays $86.25 each week for medical coverage.

Business Math 11 - Payroll (Calculating Take Home Pay with Dependents)

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Getting a paycheck is always a fun thing - especially when you first enter into the working world. But what you think you are going to be paid and what you actually take home are two very different things. If you have not already taken the quiz on PAYROLL (An Introduction) then you really should check that quiz out first. The introduction of that quiz will provide you with more details as to how to calculate what a person’s take home pay will be.

In the quiz on PAYROLL (An Introduction) you learned how to calculate a person’s take home pay when that person was single but not everyone is single.

When you get hired on at a job, you will be asked whether you are single or married and whether you have any children. Why would that be important? Because the number of people in your family that you are supporting will affect the amount of taxes (federal, state, Medicare) that are taken out and the amount of the medical insurance premium to cover the entire family. It does not change the amount a person chooses to have put into a retirement savings plan such as a 401K or the amount of percentage of social security tax and Medicare tax.

Because a person may have dependents, both the federal government and the state government give them a tax break. For example, say John is single and makes $800 a week. He pays $45 per week for medical insurance and 2% to his retirement plan (401K). His state tax is 4.95%. Let’s begin to work this problem.

$800.00 per week
$800.00 - $45.00 (health insurance premium) = $755.00
$800.00 x .02 = $16.00 (401K retirement deduction)
$755.00 - $16.00 = $739.00
$739.00 x .1 (federal tax) = $73.90
$739.00 x .0495 (state tax) = $36.5805 (rounded to $36.58)
$739.00 x .062 (social security tax) = $45.818 (rounded to $45.82)
$739.00 x .0145 (Medicare tax) = $10.7155 (rounded to $10.72)
$739.00 - $73.90 (federal tax) = $665.10
$665.10 - $36.58 (state tax) = $628.52
$628.52 - $45.82 (social security tax) = $582.70
$582.70 - $10.72 (Medicare tax) = $571.98

Solution: John’s take home pay each week is $571.98

That’s fine when John is single but now let’s say that John is married and has two children. This means that there are a total of 4 people in the family (John, his wife and 2 children). John’s weekly pay after deducting his health insurance premiums and his retirement fund is $739.00. Per the federal government, since John can claim 4 dependents (yes John can claim himself), his federal weekly taxes on $739.00 will be $32.00 and per the state government his weekly taxes will be $25.00. Now let’s see how the problem is worked with his dependent deductions.

$800.00 per week
$800.00 - $45.00 (health insurance premium) = $755.00
$800.00 x .02 = $16.00 (401K retirement deduction)
$755.00 - $16.00 = $739.00
$739.00 x .062 (social security tax) = $45.818 (rounded to $45.82)
$739.00 x .0145 (Medicare tax) = $10.7155 (rounded to $10.72)
$739.00 - $32.00 (federal tax) = $707.00
$707.00 - $25.00 (state tax) = $682.00
$682.00 - $45.82 (social security tax) = $636.18
$636.18 - $10.72 (Medicare tax) = $625.46

Solution: John’s take home pay each week with four dependents is $625.46

Notice that although John still makes the same gross pay, his take home pay will be different depending upon whether or not he is single and/or how many dependents he has. In this example, as married with children, John will take home an additional $53.48 per week or $213.92 per month.

For this quiz we will revisit the same individuals that were listed on the PAYROLL (An Introduction) quiz only this time they will be married or divorced and have dependents. So, for each person below, see if you can work out what their new take home pay will be having dependents.

1.
Billy Waxston makes $475 per week. He is married and has one child. He pays $25.35 each week for medical coverage. He puts in 2.5% of his weekly pay to his 401K retirement plan and his state income tax is 5.85%. According to the federal government he needs to pay $12.00 in federal taxes each week. The state government wants him to pay $11.00 in state taxes each week. How much money will he bring home each week in his paycheck?
$318.82
$382.18
$388.12
$381.28
Working the Problem:
$475.00 per week
$475.00 - $25.35 (health insurance premium) = $449.65
$475.00 x .025 = $11.875 (rounded to $11.88) (401K retirement deduction)
$449.65 - $11.88 = $437.77
$437.77 x .062 (social security tax) = $27.14174 (rounded to $27.14)
$437.77 x .0145 (Medicare tax) = $6.347665 (rounded to $6.35)
$437.77 - $12.00 (federal tax) = $425.77
$425.77 - $11.00 (state tax) = $414.77
$414.77 - $27.14 (social security tax) = $387.63
$387.63 - $6.35 (Medicare tax) = $381.28
Solution: Billy’s take home pay each week with three dependents is $381.28
Answer (d) is the correct answer
2.
Janet Greyson makes $900 per week. She is married and has three children. She pays $76.00 each week for medical coverage for herself. She puts in 4.5% of her weekly pay to her 401K retirement plan and her state income tax is 5.9%. According to the federal government she needs to pay $46.00 in federal taxes each week. The state government wants her to pay $33.00 in state taxes each week. How much money will she bring home each week in her paycheck?
$654.64
$665.45
$644.56
$645.46
Working the Problem:
$900.00 per week
$900.00 - $76.00 (health insurance premium) = $824.00
$900.00 x .045 = $40.50 (401K retirement deduction)
$824.00 - $40.50 = $783.50
$783.50 x .062 (social security tax) = $48.577 (rounded to $48.58)
$783.50 x .0145 (Medicare tax) = $11.36075 (rounded to $11.36)
$783.50 - $46.00 (federal tax) = $737.50
$737.50 - $33.00 (state tax) = $704.50
$704.50 - $48.58 (social security tax) = $655.92
$655.92 - $11.36 (Medicare tax) = $644.56
Solution: Janet’s take home pay each week with five dependents is $644.56
Answer (c) is the correct answer
3.
Walter Evans makes $942 per week. He is divorced and has two children. He pays $86.25 each week for medical coverage. He puts in 3.2% of his weekly pay to his 401K retirement plan and his state income tax is 8.25%. According to the federal government he needs to pay $73.00 in federal taxes each week. The state government wants him to pay $40.00 in state taxes each week. How much money will he bring home each week in his paycheck?
$694.45
$649.54
$694.54
$649.45
Working the Problem:
$942.00 per week
$942.00 - $86.25 (health insurance premium) = $855.75
$942.00 x .032 = $30.144 (rounded to $30.14) (401K retirement deduction)
$855.75 - $30.14 = $825.61
$825.61 x .062 (social security tax) = $51.18782 (rounded to $51.19)
$825.61 x .0145 (Medicare tax) = $11.971345 (rounded to $11.97)
$825.61 - $73.00 (federal tax) = $752.61
$752.61 - $40.00 (state tax) = $712.61
$712.61 - $51.19 (social security tax) = $661.42
$661.42 - $11.97 (Medicare tax) = $649.45
Solution: Walter’s take home pay each week with three dependents is $649.45
Answer (d) is the correct answer
4.
Stacy Warren makes $2,150.00 bi-monthly. She is married with two children. She pays $307.75 each pay period for medical coverage. She puts in 1.5% of her pay to her 401K retirement plan and her state income tax is 8.32%. According to the federal government she needs to pay $153.00 in federal taxes each pay period. The state government wants her to pay $90.00 in state taxes each pay period. How much money will she bring home in her paycheck?
$1,428.53
$1,528.43
$1,582.34
$1,482.35
Working the Problem:
$2,150.00 bi-monthly
$2,150.00 - $307.75 (health insurance premium) = $1,842.25
$2,150.00 x .015 = $32.25 (401K retirement deduction)
$1,842.25 - $32.25 = $1,810.00
$1,810.00 x .062 (social security tax) = $112.22
$1,810.00 x .0145 (Medicare tax) = $26.245 (rounded to $26.25)
$1,810.00 - $153.00 (federal tax) = $1,657.00
$1,657.00 - $90.00 (state tax) = $1,567.00
$1,567.00 - $112.22 (social security tax) = $1,454.78
$1,454.78 - $26.25 (Medicare tax) = $1,428.53
Solution: Stacy’s take home pay each pay period with four dependents is $1,428.53
Answer (a) is the correct answer
5.
Mark Walker makes $790 per week. He is married with no children. He pays $63.00 each week for medical coverage. He puts in 3% of his weekly pay to his 401K retirement plan and his state income tax is 6.35%. According to the federal government he needs to pay $61.00 in federal taxes each week. The state government wants him to pay $34.00 in state taxes each week. How much money will he bring home each week in his paycheck?
$545.05
$554.50
$455.50
$455.05
Working the Problem:
$790.00 per week
$790.00 - $63.00 (health insurance premium) = $727.00
$790.00 x .03 = $23.70 (401K retirement deduction)
$727.00 - $23.70 = $703.30
$703.30 x .062 (social security tax) = $43.6046 (rounded to $43.60)
$703.30 x .0145 (Medicare tax) = $10.19785 (rounded to $10.20)
$703.30 - $61.00 (federal tax) = $642.30
$642.30 - $34.00 (state tax) = $608.30
$608.30 - $43.60 (social security tax) = $564.70
$564.70 - $10.20 (Medicare tax) = $554.50
Solution: Mark’s take home pay each week with two dependents is $554.50
Answer (b) is the correct answer
6.
Jeff Walker makes $1,200 per week. He is married with 2 children. He pays $52.00 each week for medical coverage. He puts in 6% of his weekly pay to his 401K retirement plan. His state income tax is 8%. According to the federal government he needs to pay $102.00 in federal taxes each week. The state government wants him to pay $54.00 in state taxes each week. How much money will he bring home each week in his paycheck?
$837.69
$873.69
$873.96
$837.96
Working the Problem:
$1,200.00 per week
$1,200.00 - $52.00 (health insurance premium) = $1,148.00
$1,200.00 x .06 = $72.00 (401K retirement deduction)
$1,148.00 - $72.00 = $1,076.00
$1,076.00 x .062 (social security tax) = $66.712 (rounded to $66.71)
$1,076.00 x .0145 (Medicare tax) = $15.602 (rounded to $15.60)
$1,076.00 - $102.00 (federal tax) = $974.00
$974.00 - $54.00 (state tax) = $920.00
$920.00 - $66.71 (social security tax) = $853.29
$853.29 - $15.60 (Medicare tax) = $837.69
Solution: Jeff’s take home pay each week with four dependents is $837.69
Answer (a) is the correct answer
7.
Lynette Tillson makes $4,250.00 monthly. She is married with six children. She pays $645.00 each pay period for medical coverage. She puts in 7.5% of her pay to her 401K retirement plan and her state income tax is 8.15%. According to the federal government she needs to pay $126.00 in federal taxes each pay period. The state government wants her to pay $138.00 in state taxes each pay period. How much money will she bring home in her paycheck?
$2,707.85
$2,770.85
$2,077.58
$2,707.58
Working the Problem:
$4,250.00 monthly
$4,250.00 - $645.00 (health insurance premium) = $3,605.00
$4,250.00 x .075 = $318.75 (401K retirement deduction)
$3,605.00 - $318.75 = $3,286.25
$3,286.25 x .062 (social security tax) = $203.7475 (rounded to $203.75)
$3,286.25 x .0145 (Medicare tax) = $47.650625 (rounded to $47.65)
$3,286.25 - $126.00 (federal tax) = $3,160.25
$3,160.25 - $138.00 (state tax) = $3,022.25
$3,022.25 - $203.75 (social security tax) = $2,818.50
$2,818.50 - $47.65 (Medicare tax) = $2,770.85
Solution: Lynette’s take home pay each month with eight dependents is $2,770.85
Answer (b) is the correct answer
8.
Justin Moore makes $515 per week. He is married with three children. He pays $37.50 each week for medical coverage. He puts in 3% of his weekly pay to his 401K retirement plan. His state’s income tax is 6.25%. According to the federal government he needs to pay $2.00 in federal taxes each week. The state government wants him to pay $8.00 in state taxes each week. How much money will he bring home each week in his paycheck?
$461.07
$467.01
$416.70
$476.10
Working the Problem:
$515.00 per week
$515.00 - $37.50 (health insurance premium) = $477.50
$515.00 x .03 = $15.45 (401K retirement deduction)
$477.50 - $15.45 = $462.05
$462.05 x .062 (social security tax) = $28.6471 (rounded to $28.65)
$462.05 x .0145 (Medicare tax) = $6.699725 (rounded to $6.70)
$462.05 - $2.00 (federal tax) = $460.05
$460.05 - $8.00 (state tax) = $452.05
$452.05 - $28.65 (social security tax) = $423.40
$423.40 - $6.70 (Medicare tax) = $416.70
Solution: Justin’s take home pay each week with five dependents is $416.70
Answer (c) is the correct answer
9.
Zack Owen makes $2,600.00 bi-monthly. He is married with seven children. He pays $241.50 each pay period for medical coverage. He puts in 3.8% of his pay to his 401K retirement plan and his state income tax is 7.5%. According to the federal government he needs to pay $109.00 in federal taxes each pay period. The state government wants him to pay $90.00 in state taxes each pay period. How much money will he bring home in his paycheck?
$1,878.83
$1,887.83
$1,878.38
$1,888.37
Working the Problem:
$2,600.00 bi-monthly
$2,600.00 - $241.50 (health insurance premium) = $2,358.50
$2,600.00 x .038 = $98.80 (401K retirement deduction)
$2,358.50 - $98.80 = $2,259.70
$2,259.70 x .062 (social security tax) = $140.1014 (rounded to $140.10)
$2,259.70 x .0145 (Medicare tax) = $32.76565 (rounded to $32.77)
$2,259.70 - $109.00 (federal tax) = $2,150.70
$2,150.70 - $90.00 (state tax) = $2,060.70
$2,060.70 - $140.10 (social security tax) = $1,920.60
$1,920.60 - $32.77 (Medicare tax) = $1,887.83
Solution: Zack’s take home pay each pay period with nine dependents is $1,887.83
Answer (b) is the correct answer
10.
Alice Fremont makes $825 per week. She is divorced but is raising 5 children. She pays $48.75 each week for medical coverage. She puts in 4% of her weekly pay to her 401K retirement plan and her state income tax is 7%. According to the federal government she needs to pay $22.00 in federal taxes each week. The state government wants her to pay $26.00 in state taxes each week. How much money will she bring home each week in her paycheck?
$639.38
$693.83
$683.93
$638.39
Working the Problem:
$825.00 per week
$825.00 - $48.75 (health insurance premium) = $776.25
$825.00 x .04 = $33.00 (401K retirement deduction)
$776.25 - $33.00 = $743.25
$743.25 x .062 (social security tax) = $46.0815 (rounded to $46.08)
$743.25 x .0145 (Medicare tax) = $10.777125 (rounded to $10.78)
$743.25 - $22.00 (federal tax) = $721.25
$721.25 - $26.00 (state tax) = $695.25
$695.25 - $46.08 (social security tax) = $649.17
$649.17 - $10.78 (Medicare tax) = $638.39
Solution: Alice’s take home pay each week with six dependents is $638.39
Answer (d) is the correct answer
Author:  Christine G. Broome

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