General Education Development (GED) Practice Exam

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An employee earns $2,000.00 per month in gross pay, but pays 9% in federal taxes, 3% for state taxes, and 2% for local taxes. After tax, the company withholds $104.36 for health insurance. What is the employee's net pay?

$2,000.00
$1,615.64
$1,820.00
$1,720.00

The correct answer is: $1,615.64

To determine the employee's net pay, we first need to calculate the total amount of taxes deducted from the gross pay, followed by the deduction for health insurance. 1. **Calculate the total taxes**: - Federal taxes: 9% of $2,000.00 is $180.00. - State taxes: 3% of $2,000.00 is $60.00. - Local taxes: 2% of $2,000.00 is $40.00. Adding these amounts together gives the total taxes: - Total taxes = $180.00 + $60.00 + $40.00 = $280.00. 2. **Calculate the after-tax amount**: Subtract the total taxes from the gross pay: - After taxes = $2,000.00 - $280.00 = $1,720.00. 3. **Subtract health insurance costs**: Finally, we need to subtract the health insurance withholding: - Net pay = $1,720.00 - $104.36 = $1,615.64. Thus, the calculation yields a net pay of $1,615.64, making it the correct answer