Damerly Company (a Utah employer) wants to give a holiday bonus check of $250 to each employee. Since it wants the check amount to be $250, it will need to gross-up the amount of the bonus. Calculate the withholding taxes and the gross amount of the bonus to be made to John Rolen if his cumulative earnings for the year are $46,910. Besides being subject to social security taxes and federal income tax (supplemental rate), a 5.0% Utah income tax must be withheld on supplemental payments. Enter deductions beginning with a minus sign (-). You may need to adjust by a penny (subtract or add) to the gross amount to get net pay to calculate exactly to $250.00. Round your calculations and final answers to the nearest cent.

Respuesta :

Answer:

Withholding taxes

Federal income tax withheld= $100.24

OASDI tax withheld=$24.86

HI tax withheld=$5.81

Utah income tax withheld=$20.05

Gross amount= $400.96

Step-by-step explanation:

Amount per employee(desired net pay)= $250.00

Federal rate=25%=0.25

OASDI tax=6.2%=0.062

HI tax witheld= 1.45%=0.0145

Utah income tax=5%=0.05

Combined taxes= 0.25+0.062+0.0145+0.05=0.3765

Gross pay=Desired net pay/(1-all taxes)

Gross pay= 250/(1-0.3765)=250/0.6235=400.96

Working backwards

Since we have gross bonus of $400.96

Federal income tax withheld is 0.25of$400.96= $100.24

OASDI tax is 0.062of$400.96=$24.86

HI tax is 0.0145of$400.96=$5.81

Utah income tax is 0.05of$400.96=$20.05

Total deductions=$100.24+$24.86+$5.81+$20.05= $150.96

Net income is $400.96-$150.96= $250.00