Watching Your Paycheck Dwindle.

You have just accepted your first full-time job as an assistant manager trainee. You will be earning a salary of $425 per week. That sounds like a lot of money, but you know there will be deductions from your paycheck, such as federal income tax, Social Security tax, and medical insurance. Let’s find out how much you’ll actually make.

1. You are single and claim 1 allowance. How much is deducted from your weekly paycheck for federal income tax?

2. Your state tax rate is 3.2 percent on all gross earnings. How much is deducted from your weekly paycheck for state income tax?

3. Your local tax rate is 1.1 percent on all gross earnings. How much is deducted from your weekly paycheck for local income tax?

4. Social Security tax is deducted at the standard rate of 6.2 percent on the first $90,000. How much will you pay into Social Security each week?

5. Medicare is deducted at the standard rate of 1.45 percent on all earnings. How much will you pay into Medicare each week?

6. You know it’s a good idea to have medical insurance. Since your employer is offering to pay 65 percent of the annual cost, you decide to participate in the company’s plan. If the plan has an annual cost of $3,000, how much is deducted from your weekly paycheck for your share of the medical plan?

7. Given all of the above deductions, what will your net pay be each week?

You work hard for many years and eventually work your way up to manager with an annual salary of $92,000.

8. What is the yearly amount you will pay in Social Security taxes?

9. If your state tax is calculated on a graduated basis of 3.2 percent on the first $40,000 earned and 3.5 percent over $40,000, how much state income tax will you pay annually?

(source) – edited for correctness