Question

Your primary job’s gross income is $3,468.73/month. Deductions are FICA (7.65%), federal tax withholding (11.5%), and state tax withholding (7.8%). How much are your fixed expenses if they are 36% of your realized income? Round any decimals to the nearest penny.

Answer 1

To find your fixed expenses, we first need to calculate your realized income after deductions.

1. **Calculate Deductions**:
- **FICA (7.65%)**:
\[
\text{FICA} = 0.0765 \times 3,468.73 = 263.62
\]

- **Federal Tax (11.5%)**:
\[
\text{Federal Tax} = 0.115 \times 3,468.73 = 399.91
\]

- **State Tax (7.8%)**:
\[
\text{State Tax} = 0.078 \times 3,468.73 = 271.36
\]

2. **Total Deductions**:
\[
\text{Total Deductions} = \text{FICA} + \text{Federal Tax} + \text{State Tax}
\]
\[
\text{Total Deductions} = 263.62 + 399.91 + 271.36 = 934.89
\]

3. **Calculate Realized Income**:
\[
\text{Realized Income} = \text{Gross Income} - \text{Total Deductions}
\]
\[
\text{Realized Income} = 3,468.73 - 934.89 = 2,533.84
\]

4. **Calculate Fixed Expenses** (36% of Realized Income):
\[
\text{Fixed Expenses} = 0.36 \times \text{Realized Income}
\]
\[
\text{Fixed Expenses} = 0.36 \times 2,533.84 = 890.18
\]

So, your fixed expenses are **$890.18**.