Income Tax Withholding

1.Mattola Company is giving each of its employees a holiday bonus of $100 on December 13, 20-- (a nonpayday). The company wants each employee's check to be $100. The supplemental tax percent is used.

Nobody has capped for OASDI prior to the bonus check.

a.What will be the gross amount of each bonus if each employee pays a state income tax of 2.8% (besides the other payroll taxes)?

You may need to add one penny to the gross so that net bonus is exactly $100.00. Round your calculations and final answers to the nearest cent.

b.What would the net amount of each bonus check be if the company did not gross-up the bonus? Round your intermediary calculations to the nearest cent.

2.George Clausen (age 48) is employed by Kline Company and is paid an annual salary of $42,640. He has just decided to join the company's Simple Retirement Account (IRA form) and has a few questions. Answer the following for Clausen:Round your answer to the nearest cent.

a.What is the maximum that he can contribute into this retirement fund?

Note:For items c. & d. below, round interim amounts to two decimal places. Use these values in subsequent computations then round final answer to two decimal places.

b.What would be the company's contribution?

$1,279.20

c.What would be his weekly take-home if he contributes the maximum allowed retirement contribution (married, 2 allowances,wage-bracket method, and a 2.3% state income tax on total wages)?

Click here to access the Wage-Bracket Method Tables.

d.What would be his weekly take-home pay without the retirement contribution deduction?