Provide an appropriate response.Robert Stang has gross earnings of $8000.00 weekly. He is married and has 4 withholding allowances. His deductions include FICA, Medicare, federal withholding, state disability at 1% of gross income, state withholding at 9% of gross income, union dues of $14.70, and credit union savings of $50.00. Suppose you are to find his net pay for a week in January. Why is it important to know that you are finding the net pay for a week in January versus a week in December? Explain.

Question

What will be an ideal response?

Answer 1

Over the course of the year, Mr. Strang will exceed the maximum earnings subject to the Social Security tax. This must be identified so that the correct amount of Social Security tax is applied to Mr. Stang's weekly gross earnings when calculating his net pay. Mr. Stang's January gross earnings are subject to the 6.2% Social Security tax, but Mr Stang's December gross earnings will not be subject to the Social Security tax because the $110,000 maximum will be reached.