Question

Looking at her paycheck, Rhonda notices that $30.56 was withheld from her last paycheck for state income tax while $122.25 was withheld for federal income tax. She knows that she indicated on her employment paperwork to set her state withholding at 21% of the federal withholding. What should Rhonda be thinking?
a.
The state withholding is correct, the correct amount is being withheld.
b.
The state withholding is too low, too little is being withheld.
c.
The state withholding is too high, too much is being withheld.
d.
She should not have any money withheld by the state since she is having federal taxes withheld.

Answer 1

Compute 21% of the federal withholding: 0.21 × $122.25 = $25.6725 ≈ $25.67. Since $30.56 was withheld (more than $25.67), the state withholding is too high. Answer: c.