Molly has biweekly gross earnings of $839.52. By claiming 1 more withholding allowance, Molly would have her take-home pay increase. How many withholding allowances does Molly currently claim?
a. 1
b. 2
c. 3
d. 4
Answer (2)
Molly's take-home pay increases by claiming one more allowance.
This indicates Molly is currently under-claiming allowances.
Among the options, claiming 1 allowance is the most likely scenario for under-claiming.
Therefore, Molly currently claims 1 allowance.
Explanation
Understanding the Problem Molly's biweekly gross earnings are $839.52. The problem states that by claiming one more withholding allowance, Molly would increase her take-home pay. We need to determine how many withholding allowances Molly currently claims from the given options: a. 1, b. 2, c. 3, d. 4.
Analyzing the Situation The fact that claiming one more withholding allowance increases Molly's take-home pay suggests that Molly is currently having too much tax withheld. This typically happens when someone claims too few withholding allowances.
Making an Educated Guess Without specific tax information or withholding tables, it's impossible to calculate the exact number of allowances Molly should claim. However, we can make an educated guess based on the information provided. If increasing the number of allowances increases her take-home pay, she is likely under-claiming.
Determining the Most Likely Answer Given the options, if Molly is under-claiming, she likely has a low number of allowances. The lowest number among the options is 1. If she were claiming 3 or 4 allowances, it would be less likely that claiming one more would increase her take-home pay.
Final Answer Therefore, the most likely answer is that Molly currently claims 1 withholding allowance.
Examples
Withholding allowances are a way to tell your employer how much tax to withhold from your paycheck. Understanding how these allowances affect your take-home pay is crucial for personal finance. If you claim too few allowances, you'll have more tax withheld and might receive a larger refund at the end of the year. If you claim too many, you'll have less tax withheld, and you might owe money when you file your taxes. Balancing your withholding allowances can help you manage your cash flow throughout the year.
Molly currently claims 1 withholding allowance, which is likely the reason why her take-home pay will increase by claiming one more allowance. This indicates she is currently under-claiming allowances. Thus, the answer is (a) 1 allowance.
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