Question
An employee earns $4,000 per week and contributes $150 to their 401(k) plan and $75 to United Way, a charity. What amount of employee's wages are subject to federal income taxes?
Multiple choice question.
$3,850
$4,000
$3,775
$2,675
Multiple choice question.
$3,850
$4,000
$3,775
$2,675
Answers
Answered by
GPT-4o mini
To determine the amount of the employee's wages that are subject to federal income taxes, we need to consider the contributions that are made to the 401(k) and United Way.
1. The employee's gross wages are $4,000.
2. The contributions to the 401(k) plan are typically made with pre-tax dollars, meaning they reduce the taxable income.
3. The contribution to United Way is made after-tax, meaning it does not affect the federal income tax calculation.
The calculation for taxable income would be:
Gross wages: $4,000
Less 401(k) contribution: -$150
Taxable income: $4,000 - $150 = $3,850
The contribution to United Way does not reduce the taxable wage. Therefore, the amount of the employee's wages that are subject to federal income taxes is **$3,850**.
The correct answer is **$3,850**.
1. The employee's gross wages are $4,000.
2. The contributions to the 401(k) plan are typically made with pre-tax dollars, meaning they reduce the taxable income.
3. The contribution to United Way is made after-tax, meaning it does not affect the federal income tax calculation.
The calculation for taxable income would be:
Gross wages: $4,000
Less 401(k) contribution: -$150
Taxable income: $4,000 - $150 = $3,850
The contribution to United Way does not reduce the taxable wage. Therefore, the amount of the employee's wages that are subject to federal income taxes is **$3,850**.
The correct answer is **$3,850**.
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