PMT = (P(r/n))/(1 - (1 + r/n) ^ (- n * t)) Dan works as a waiter at Red Lobster and makes $8.50 hour plus an additional $200 in tips. He worked a single 12 hour shift this week. They withhold $10% $ of his pay for federal taxes and $6.2% for FICA taxes. What would Dan's net pay be?

Answer 1

To calculate Dan's net pay for the week, we first need to determine his total earnings before taxes and then apply the tax withholdings. The steps are as follows:

1. Calculate Hourly Earnings:

   • Hourly wage: $8.50
   • Hours worked: 12

   $$\text{Total hourly earnings}=\text{Hourly wage}\times \text{Hours worked}=8.50\times 12=102$$

2. Add Tips:

   • Tips: $200

   $$\text{Total earnings before taxes}=\text{Hourly earnings}+\text{Tips}=102+200=302$$

3. Calculate Federal Tax Withholding:

   • Federal tax rate: 10%

   $$\text{Federal tax}=\text{Total earnings}\times \text{Federal tax rate}=302\times 0.10=30.20$$

4. Calculate FICA Tax Withholding:

   • FICA tax rate: 6.2%

   $$\text{FICA tax}=\text{Total earnings}\times \text{FICA tax rate}=302\times 0.062=18.684$$

5. Calculate Total Tax Withholdings:

   $$\text{Total tax withholdings}=\text{Federal tax}+\text{FICA tax}=30.20+18.684=48.884$$

6. Calculate Net Pay:

   $$\text{Net pay}=\text{Total earnings}-\text{Total tax withholdings}=302-48.884\approx 253.116$$

Thus, Dan's net pay after taxes would be approximately $253.12.