Sure, let's analyze the possible scenarios one by one using the provided tax table:
- Scenario a: Gross pay stays the same and withholding allowances increase.
Looking at the tax table, we can observe that for any given range of wages, as the number of withholding allowances increases, the amount of federal income tax withheld decreases. For example, for wages between [tex]$720 and $[/tex]740:
- With 0 allowances: [tex]$80
- With 1 allowance: $[/tex]62
- With 2 allowances: [tex]$44
- And so on.
Therefore, if the gross pay stays the same and the withholding allowances increase, the amount of federal income tax withheld will decrease.
- Scenario b: Gross pay increases by more than $[/tex]20 and withholding allowances stay the same.
Let's take an example from the tax table:
- Wages between [tex]$740 and $[/tex]760 with 0 allowances: [tex]$83
- Wages between $[/tex]760 and [tex]$780 with 0 allowances: $[/tex]86
Here, as the gross pay increases by more than [tex]$20 while the withholding allowances stay the same, the amount of federal income tax withheld increases.
- Scenario c: Gross pay increases by more than $[/tex]20 and withholding allowances increase.
This scenario involves two changes: an increase in gross pay and an increase in withholding allowances. The tax impact will be determined by the balance between these two changes:
- An increase in gross pay tends to increase the amount of tax withheld.
- An increase in withholding allowances tends to decrease the amount of tax withheld.
The net effect on the tax withheld will depend on the specifics of both changes, making it less certain whether the tax will increase or decrease. However, generally, higher gross pay results in more tax withheld, but without more precise details, we cannot be sure of the change.
- Scenario d: Gross pay decreases by more than [tex]$20 and withholding allowances stay the same.
Using the same tax table:
- Wages between $[/tex]760 and [tex]$780 with 0 allowances: $[/tex]86
- Wages between [tex]$740 and $[/tex]760 with 0 allowances: [tex]$83
Here, as the gross pay decreases by more than $[/tex]20 while the withholding allowances stay the same, the amount of federal income tax withheld decreases.
Based on the analysis of each scenario, the one that will definitely cause the amount of federal income tax withheld to increase is:
Option b: Gross pay increases by more than $20 and withholding allowances stay the same.
Thus, the correct answer is b.
