An employee works 50 hours (50-40 were overtime hours) during a workweek in December of 2015. He earns $9,500/month, with his employer paying 1.5 times the regular rate of pay for overtime hours. To date, he has earned $109,700 during the year. He has requested that his employer withhold 13% of gross pay to contribute to a 403(b) plan. Calculate gross pay for the weekly pay period, then determine taxable income used to calculate federal income tax withholding, Social Security, and Medicare tax.

(a) Calculate gross pay for the weekly pay period is $3,265.60.

(b) Taxable income used to calculate federal income tax withholding, Social Security, and Medicare tax is $98,280.07.

Explanation:

From the question, we can obtain the following:

Number of regular weekly hours = 40

Number of regular monthly hours = Number of regular weekly hours * 4 = 40 * 4 = 160

Number of overtime hours during the workweek = 50 - 40 = 10

Monthly regular pay = $9,500

Weekly regular pay = Monthly regular pay / 4 = $2,375

Regular hourly rate = Monthly regular pay / Number of regular monthly hours = $9,500 / 160 = $59.38

Overtime rate = Regular hourly rate * 1.50 = $59.38 * 1.50 = $89.06

Overtime pay for the workweek = Number of overtime hours * Overtime rate = 10 * $89.06 = $890.60

We can therefore proceed as follows:

(a) Calculate gross pay for the weekly pay period

Gross pay for the weekly pay period = Weekly regular pay + Overtime pay for the workweek  = $2,375 + $890.60 = $3,265.60

(b) Determine taxable income used to calculate federal income tax withholding, Social Security, and Medicare tax.

Gross pay = Amount earned to date + Gross pay for the weekly pay period = $109,700 + $3,265.60 = $112,965.60

Contribution to a 403(b) plan = Gross pay * 13% = $14,685.53

Taxable income = Gross pay - Contribution to a 403(b) plan = $112,965.60 - $14,685.53 = $98,280.07

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