Davis's net paycheck is $2,920.50.
| Type of Tax | Amount |
|---|---|
| Federal | $945.00 |
| State | $225.00 |
| Medicare | $65.25 |
| Social Security | $344.25 |
Based on the information in the table, what is Davis's gross pay?
A. $2,920.50
B. $2,985.75
C. $4,090.50
D. $4,500.00
Answer (2)
Calculate the total tax amount by summing the amounts for Federal, State, Medicare, and Social Security taxes: T o t a lT a x = $945.00 + $225.00 + $65.25 + $344.25 = $1579.50 .
Add the total tax amount to the net paycheck to find the gross pay: G ross P a y = $2920.50 + $1579.50 .
Perform the addition: G ross P a y = $4500.00 .
Davis's gross pay is $4500.00 .
Explanation
Understanding the Problem We are given Davis's net paycheck and the amounts withheld for various taxes. Our goal is to find Davis's gross pay, which is the amount earned before any deductions.
Finding the Total Tax Amount To find the gross pay, we need to add up all the deductions (taxes) and the net paycheck. The taxes include Federal tax, State tax, Medicare tax, and Social Security tax.
Calculating Total Tax The total tax amount is the sum of the individual taxes: T o t a lT a x = F e d er a l + St a t e + M e d i c a re + S oc ia lS ec u r i t y T o t a lT a x = $945.00 + $225.00 + $65.25 + $344.25 The result of the operation is: T o t a lT a x = $1579.50
Calculating Gross Pay Now, we add the total tax amount to the net paycheck to find the gross pay: G ross P a y = N e tP a yc h ec k + T o t a lT a x G ross P a y = $2920.50 + $1579.50 The result of the operation is: G ross P a y = $4500.00
Final Answer Therefore, Davis's gross pay is $4500.00 .
Examples
Understanding gross pay versus net pay is crucial in personal finance. For example, when negotiating a salary for a new job, it's important to consider the taxes and deductions that will be taken out of your gross pay to determine your actual take-home pay (net pay). Knowing how to calculate your gross pay helps you budget effectively and understand your financial obligations. This calculation is also essential for understanding your tax liabilities and planning for retirement.
Davis's gross pay is calculated by adding the total taxes deducted to his net paycheck. His total tax amount is $1,579.50, which gives a gross pay of $4,500.00. Therefore, the correct answer is D. $4,500.00.
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