Question

You have a part time job paying $8.95/hr and your deductions
are FICA 7.65%, federal tax withholding 9.3%, and state
tax withholding 5.8%. You save $30.00/week for a savings account.
If you work 15 hours/week, how much discretionary income is
left each week? Assume that all of the income from your
part time job is discretionary

Answer 1

To find out your discretionary income each week, we'll first need to calculate your total earnings from your part-time job, deduct the taxes and savings, and then see what's left as discretionary income.

1. **Calculate total earnings:**
\[
\text{Total earnings} = \text{Hourly wage} \times \text{Hours worked}
\]
\[
\text{Total earnings} = 8.95 \, \text{per hour} \times 15 \, \text{hours} = 134.25
\]

2. **Calculate total deductions:**
- **FICA deduction:**
\[
\text{FICA} = \text{Total earnings} \times 7.65\%
\]
\[
\text{FICA} = 134.25 \times 0.0765 \approx 10.27
\]

- **Federal tax withholding:**
\[
\text{Federal tax} = \text{Total earnings} \times 9.3\%
\]
\[
\text{Federal tax} = 134.25 \times 0.093 \approx 12.48
\]

- **State tax withholding:**
\[
\text{State tax} = \text{Total earnings} \times 5.8\%
\]
\[
\text{State tax} = 134.25 \times 0.058 \approx 7.79
\]

- **Total deductions:**
\[
\text{Total deductions} = \text{FICA} + \text{Federal tax} + \text{State tax}
\]
\[
\text{Total deductions} = 10.27 + 12.48 + 7.79 \approx 30.54
\]

3. **Calculate net income after deductions:**
\[
\text{Net income} = \text{Total earnings} - \text{Total deductions}
\]
\[
\text{Net income} = 134.25 - 30.54 \approx 103.71
\]

4. **Calculate discretionary income:**
\[
\text{Discretionary income} = \text{Net income} - \text{Savings}
\]
\[
\text{Discretionary income} = 103.71 - 30.00 \approx 73.71
\]

Therefore, your discretionary income left each week is approximately **$73.71**.