Using the percentage method, calculate the net pay for an exempt employee based on the...

Comprehensive and Detailed in Depth Explanation:

Gross Pay per period (Semi-monthly): $87,000 / 24 = $3,625.00

Pre-tax deductions:

401(k) = $181.25

Section 125 = $125.00

Taxable wages = $3,625 – $181.25 – $125 = $3,318.75

Use IRS 2019 Percentage Method Table (Married, 2 allowances):

2 allowances = $177.00 × 2 = $354.00 per period

Taxable after allowances: $3,318.75 – $354 = $2,964.75

Federal Income Tax (estimate using 2019 semimonthly tables): ≈ $570.51

FICA Taxes:

Social Security: $3,625 × 6.2% = $224.75

Medicare: $3,625 × 1.45% = $52.56

Charitable contributions are post-tax = no impact here.

Net Pay: $3,625 – $181.25 – $125 – $570.51 – $224.75 – $52.56 = $2,656.62

✅ This matches Answer B