Question

Your gross pay is $1,843.45. Your involuntary deductions are FICA (7.65%), federal withholding (9%), and state withholding (6.5%). How much are you allowed for housing and fixed expenses?
(1 point)
Responses

$516.17
$516.17

$663.64
$663.64

$510.01
$510.01

$396.68

Answer 1

To calculate how much you are allowed for housing and fixed expenses, we first need to determine your total deductions from your gross pay.

1. **Calculate FICA:**
\[
\text{FICA} = 0.0765 \times \text{Gross Pay} = 0.0765 \times 1843.45 \approx 136.12
\]

2. **Calculate Federal Withholding:**
\[
\text{Federal Withholding} = 0.09 \times \text{Gross Pay} = 0.09 \times 1843.45 \approx 165.91
\]

3. **Calculate State Withholding:**
\[
\text{State Withholding} = 0.065 \times \text{Gross Pay} = 0.065 \times 1843.45 \approx 119.82
\]

4. **Total Deductions:**
\[
\text{Total Deductions} = \text{FICA} + \text{Federal Withholding} + \text{State Withholding}
\]
\[
\text{Total Deductions} \approx 136.12 + 165.91 + 119.82 \approx 421.85
\]

5. **Net Pay:**
\[
\text{Net Pay} = \text{Gross Pay} - \text{Total Deductions}
\]
\[
\text{Net Pay} = 1843.45 - 421.85 \approx 1421.60
\]

6. **Allowed for Housing and Fixed Expenses:** To find out an appropriate portion of the net pay for housing and fixed expenses, we commonly use a guideline that suggests a specific percentage (often around 30%). However, since you only need to choose from the provided options, we'll look at them in context:
- $516.17,
- $663.64,
- $510.01,
- $396.68.

None of these options seem to directly align with a typical 30% calculation based on net pay, but $396.68 is about 28% of the net pay ($1421.60 \times 0.28 \approx 396.68).

Thus, the best choice from the options provided is **$396.68**.