Answer :
First, let's determine Marilyn's current deductions and net pay with 3 federal withholding allowances.
### Step-by-Step Calculation
1. Gross Pay
[tex]\[ \text{Gross Pay} = \$810 \][/tex]
2. Federal Tax for 3 Withholding Allowances
Using the wage range for \[tex]$810, which falls in \(800 \leq \text{Gross Pay} < 820\): For 3 allowances: \[ \text{Federal Tax (3 allowances)} = \$[/tex]37 \]
3. Social Security Tax
Social Security tax rate is [tex]\(6.2\%\)[/tex]:
[tex]\[ \text{Social Security Tax} = 810 \times 0.062 = \$50.22 \][/tex]
4. Medicare Tax
Medicare tax rate is [tex]\(1.45\%\)[/tex]:
[tex]\[ \text{Medicare Tax} = 810 \times 0.0145 = \$11.745 \][/tex]
5. State Tax
State tax rate is [tex]\(21\%\)[/tex] of the federal tax:
[tex]\[ \text{State Tax (3 allowances)} = 37 \times 0.21 = \$7.77 \][/tex]
6. Total Deductions with 3 Allowances
[tex]\[ \text{Total Deductions (3 allowances)} = 37 + 50.22 + 11.745 + 7.77 = \$106.735 \][/tex]
7. Net Pay with 3 Allowances
[tex]\[ \text{Net Pay (3 allowances)} = 810 - 106.735 = \$703.265 \][/tex]
Next, let's determine the deductions and net pay if Marilyn increases her federal withholding allowances from 3 to 4.
8. Federal Tax for 4 Withholding Allowances
Using the same wage range [tex]\(800 \leq \text{Gross Pay} < 820\)[/tex]:
For 4 allowances:
[tex]\[ \text{Federal Tax (4 allowances)} = \$22 \][/tex]
9. State Tax with 4 Allowances
[tex]\[ \text{State Tax (4 allowances)} = 22 \times 0.21 = \$4.62 \][/tex]
10. Total Deductions with 4 Allowances
[tex]\[ \text{Total Deductions (4 allowances)} = 22 + 50.22 + 11.745 + 4.62 = \$88.585 \][/tex]
11. Net Pay with 4 Allowances
[tex]\[ \text{Net Pay (4 allowances)} = 810 - 88.585 = \$721.415 \][/tex]
12. Net Pay Difference
[tex]\[ \text{Net Pay Difference} = 721.415 - 703.265 = \$18.15 \][/tex]
### Conclusion
Marilyn's net pay will increase by [tex]\(\$18.15\)[/tex] if she increases her federal withholding allowances from 3 to 4.
The correct answer is:
[tex]\[ \text{c. Her net pay will increase by } \$18.15. \][/tex]
### Step-by-Step Calculation
1. Gross Pay
[tex]\[ \text{Gross Pay} = \$810 \][/tex]
2. Federal Tax for 3 Withholding Allowances
Using the wage range for \[tex]$810, which falls in \(800 \leq \text{Gross Pay} < 820\): For 3 allowances: \[ \text{Federal Tax (3 allowances)} = \$[/tex]37 \]
3. Social Security Tax
Social Security tax rate is [tex]\(6.2\%\)[/tex]:
[tex]\[ \text{Social Security Tax} = 810 \times 0.062 = \$50.22 \][/tex]
4. Medicare Tax
Medicare tax rate is [tex]\(1.45\%\)[/tex]:
[tex]\[ \text{Medicare Tax} = 810 \times 0.0145 = \$11.745 \][/tex]
5. State Tax
State tax rate is [tex]\(21\%\)[/tex] of the federal tax:
[tex]\[ \text{State Tax (3 allowances)} = 37 \times 0.21 = \$7.77 \][/tex]
6. Total Deductions with 3 Allowances
[tex]\[ \text{Total Deductions (3 allowances)} = 37 + 50.22 + 11.745 + 7.77 = \$106.735 \][/tex]
7. Net Pay with 3 Allowances
[tex]\[ \text{Net Pay (3 allowances)} = 810 - 106.735 = \$703.265 \][/tex]
Next, let's determine the deductions and net pay if Marilyn increases her federal withholding allowances from 3 to 4.
8. Federal Tax for 4 Withholding Allowances
Using the same wage range [tex]\(800 \leq \text{Gross Pay} < 820\)[/tex]:
For 4 allowances:
[tex]\[ \text{Federal Tax (4 allowances)} = \$22 \][/tex]
9. State Tax with 4 Allowances
[tex]\[ \text{State Tax (4 allowances)} = 22 \times 0.21 = \$4.62 \][/tex]
10. Total Deductions with 4 Allowances
[tex]\[ \text{Total Deductions (4 allowances)} = 22 + 50.22 + 11.745 + 4.62 = \$88.585 \][/tex]
11. Net Pay with 4 Allowances
[tex]\[ \text{Net Pay (4 allowances)} = 810 - 88.585 = \$721.415 \][/tex]
12. Net Pay Difference
[tex]\[ \text{Net Pay Difference} = 721.415 - 703.265 = \$18.15 \][/tex]
### Conclusion
Marilyn's net pay will increase by [tex]\(\$18.15\)[/tex] if she increases her federal withholding allowances from 3 to 4.
The correct answer is:
[tex]\[ \text{c. Her net pay will increase by } \$18.15. \][/tex]
