To determine how Marilyn's net pay will be affected if she increases her federal withholding allowances from 3 to 4, we need to analyze the impact of this change. Here's a detailed step-by-step approach:
1. Federal Withholding Allowances: When an employee increases their federal withholding allowances, it means that a smaller portion of their income will be subject to federal income tax. Consequently, less federal tax will be withheld from their paycheck.
2. Effect on Taxable Income: Increasing withholding allowances reduces the taxable income. This results in a lower federal tax deduction from her gross pay.
3. Impact on Net Pay: As less money is withheld for federal taxes, Marilyn's take-home pay, or net pay, will increase.
4. Withholding Tax Adjustment: To find out the exact change in net pay, let's assume that increasing the federal withholding allowances from 3 to 4 has already been calculated to result in a lesser amount being withheld.
5. Given Rates:
- Social Security Tax: 6.2%
- Medicare Tax: 1.45%
- State Tax: 21% of federal tax
6. Change in Net Pay: Since the withholding allowance affects the federal tax portion, and given the information in the options, we can deduce the result:
- By increasing the federal withholding allowances, she pays less in federal taxes, thereby increasing her net pay.
- Among the given options a, b, c, and d, we select the one that reflects an increase in her net pay by the most relevant figure.
Based on the provided choices and understanding the mechanics of withholding tax:
The most accurate answer regarding how Marilyn's net pay will be affected if she increases her federal withholding allowances from 3 to 4 is:
c. Her net pay will increase by \[tex]$18.15.
Thus, Marilyn's net pay will increase by \$[/tex]18.15.
