Sara is an hourly employee that makes $ 7.50 an hour and works 40 hours a week. She gets paid weekly from XYZ company. On Sara's W-4 she is claiming single and 1, which states that she is claiming herself.
The above table is know as a publication 15 a wage table. As you can see the above table is for employee's that are filing single and that are paid weekly. Since this exercise is understand how to calculate net pay from gross pay. The following information has been provided for easier calculation.Here is the needed information that we need to have before we can determine Sara's net pay.
- $ 12.00 Federal Withholding (This amount was based on Sara's gross pay and wage table)
- $ 18.60 Social Security ( 6.2% of gross pay)
- $ 4.35 Medicare (1.45% of gross pay)
We know that Sara had worked 40 hours and her rate of pay is $ 7.50. So lets calculate her pay based on her hours worked.
40 hours x $ 7.50 an hour = $ 300.00 gross earnings
Now that we know Sara's gross earnings we can take the following taxes away from her gross.
How we came to $ 18.60 for Social Security was taking Sara's gross pay of $ 300.00 and multiplying it by 6.2%.
How we came to $ 4.35 for Medicare was taking Sara's gross pay of $ 300.00 and multiplying it by 1.45%.
Now we need to take the following dollar amounts that were calculated as her weekly taxes away from her gross earnings.
300.00 gross earnings
(12.00) Federal Withholding
(18.60) Social Security 6.2%
(4.35) Medicare 1.45%
265.05 Net Pay
After all required deductions have been minus away from Sara's gross earnings, her take home pay, which is her net pay is $ 265.05 for the week.
****Please note that the following example is just a basic understanding on how to calculate net pay. Information was provided to complete this exercise for viewer to have a basic understanding of what taxes need to be deducted in order to calculate net pay.****
