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Answer :
Below is a step‐by‐step explanation of how the calculations are performed.
1. First, assume that the monthly gross salary is
[tex]$$\text{Gross Salary} = 5000.$$[/tex]
2. The income tax rate is
[tex]$$\text{Income Tax Rate} = 20\% = 0.20,$$[/tex]
and the FICA tax rate is
[tex]$$\text{FICA Tax Rate} = 7.65\% = 0.0765.$$[/tex]
3. To find the combined tax rate, add the two tax rates:
[tex]$$\text{Total Tax Rate} = 0.20 + 0.0765 = 0.2765.$$[/tex]
This means that a total of 27.65% of the gross pay goes to taxes.
4. The total taxes paid are computed by multiplying the gross salary by the combined tax rate:
[tex]$$\text{Total Taxes Paid} = 5000 \times 0.2765 = 1382.5.$$[/tex]
5. The net income after taxes is then calculated by subtracting the total taxes paid from the gross salary:
[tex]$$\text{Net Income} = 5000 - 1382.5 = 3617.5.$$[/tex]
Since the provided gross salary is monthly, the monthly net income is
[tex]$$\text{Monthly Net Income} = 3617.5.$$[/tex]
6. Now, applying the 50/30/20 budgeting rule to the monthly net income:
- For Needs (50% of monthly net income):
[tex]$$\text{Needs} = 3617.5 \times 0.5 = 1808.75.$$[/tex]
- For Wants (30% of monthly net income):
[tex]$$\text{Wants} = 3617.5 \times 0.3 = 1085.25.$$[/tex]
- For Savings (20% of monthly net income):
[tex]$$\text{Savings} = 3617.5 \times 0.2 = 723.5.$$[/tex]
7. Next, we consider the housing and utility expenses if the person lives alone:
- The monthly housing payment is assumed to be
[tex]$$\text{Monthly Housing Payment (alone)} = 1200.$$[/tex]
- The utilities are estimated as follows:
- Water: [tex]$$50,$$[/tex]
- Electric: [tex]$$60,$$[/tex]
- Gas: [tex]$$40,$$[/tex]
- Sewer: [tex]$$30,$$[/tex]
- Internet: [tex]$$70,$$[/tex]
- Cable: [tex]$$80.$$[/tex]
8. If the person has a roommate, the housing and utility costs would be split equally (divided by 2). Thus, the roommate share becomes:
- Monthly housing payment split:
[tex]$$\text{Monthly Housing Payment (roommate)} = \frac{1200}{2} = 600.$$[/tex]
- Utilities when split between the two:
- Water: [tex]$$\frac{50}{2} = 25,$$[/tex]
- Electric: [tex]$$\frac{60}{2} = 30,$$[/tex]
- Gas: [tex]$$\frac{40}{2} = 20,$$[/tex]
- Sewer: [tex]$$\frac{30}{2} = 15,$$[/tex]
- Internet: [tex]$$\frac{70}{2} = 35,$$[/tex]
- Cable: [tex]$$\frac{80}{2} = 40.$$[/tex]
The final numerical results are:
- Gross Salary: \[tex]$5000
- Income Tax Rate: 0.20
- FICA Tax Rate: 0.0765
- Total Tax Rate: 0.2765
- Total Taxes Paid: \$[/tex]1382.5
- Net Income: \[tex]$3617.5
- Monthly Net Income: \$[/tex]3617.5
- Needs: \[tex]$1808.75
- Wants: \$[/tex]1085.25
- Savings: \[tex]$723.5
- Monthly Housing Payment (alone): \$[/tex]1200
- Water (alone): \[tex]$50
- Electric (alone): \$[/tex]60
- Gas (alone): \[tex]$40
- Sewer (alone): \$[/tex]30
- Internet (alone): \[tex]$70
- Cable (alone): \$[/tex]80
- Monthly Housing Payment (roommate): \[tex]$600
- Water (roommate): \$[/tex]25
- Electric (roommate): \[tex]$30
- Gas (roommate): \$[/tex]20
- Sewer (roommate): \[tex]$15
- Internet (roommate): \$[/tex]35
- Cable (roommate): \$40
This detailed explanation shows each step and corresponding calculation that leads to the numerical results provided above.
1. First, assume that the monthly gross salary is
[tex]$$\text{Gross Salary} = 5000.$$[/tex]
2. The income tax rate is
[tex]$$\text{Income Tax Rate} = 20\% = 0.20,$$[/tex]
and the FICA tax rate is
[tex]$$\text{FICA Tax Rate} = 7.65\% = 0.0765.$$[/tex]
3. To find the combined tax rate, add the two tax rates:
[tex]$$\text{Total Tax Rate} = 0.20 + 0.0765 = 0.2765.$$[/tex]
This means that a total of 27.65% of the gross pay goes to taxes.
4. The total taxes paid are computed by multiplying the gross salary by the combined tax rate:
[tex]$$\text{Total Taxes Paid} = 5000 \times 0.2765 = 1382.5.$$[/tex]
5. The net income after taxes is then calculated by subtracting the total taxes paid from the gross salary:
[tex]$$\text{Net Income} = 5000 - 1382.5 = 3617.5.$$[/tex]
Since the provided gross salary is monthly, the monthly net income is
[tex]$$\text{Monthly Net Income} = 3617.5.$$[/tex]
6. Now, applying the 50/30/20 budgeting rule to the monthly net income:
- For Needs (50% of monthly net income):
[tex]$$\text{Needs} = 3617.5 \times 0.5 = 1808.75.$$[/tex]
- For Wants (30% of monthly net income):
[tex]$$\text{Wants} = 3617.5 \times 0.3 = 1085.25.$$[/tex]
- For Savings (20% of monthly net income):
[tex]$$\text{Savings} = 3617.5 \times 0.2 = 723.5.$$[/tex]
7. Next, we consider the housing and utility expenses if the person lives alone:
- The monthly housing payment is assumed to be
[tex]$$\text{Monthly Housing Payment (alone)} = 1200.$$[/tex]
- The utilities are estimated as follows:
- Water: [tex]$$50,$$[/tex]
- Electric: [tex]$$60,$$[/tex]
- Gas: [tex]$$40,$$[/tex]
- Sewer: [tex]$$30,$$[/tex]
- Internet: [tex]$$70,$$[/tex]
- Cable: [tex]$$80.$$[/tex]
8. If the person has a roommate, the housing and utility costs would be split equally (divided by 2). Thus, the roommate share becomes:
- Monthly housing payment split:
[tex]$$\text{Monthly Housing Payment (roommate)} = \frac{1200}{2} = 600.$$[/tex]
- Utilities when split between the two:
- Water: [tex]$$\frac{50}{2} = 25,$$[/tex]
- Electric: [tex]$$\frac{60}{2} = 30,$$[/tex]
- Gas: [tex]$$\frac{40}{2} = 20,$$[/tex]
- Sewer: [tex]$$\frac{30}{2} = 15,$$[/tex]
- Internet: [tex]$$\frac{70}{2} = 35,$$[/tex]
- Cable: [tex]$$\frac{80}{2} = 40.$$[/tex]
The final numerical results are:
- Gross Salary: \[tex]$5000
- Income Tax Rate: 0.20
- FICA Tax Rate: 0.0765
- Total Tax Rate: 0.2765
- Total Taxes Paid: \$[/tex]1382.5
- Net Income: \[tex]$3617.5
- Monthly Net Income: \$[/tex]3617.5
- Needs: \[tex]$1808.75
- Wants: \$[/tex]1085.25
- Savings: \[tex]$723.5
- Monthly Housing Payment (alone): \$[/tex]1200
- Water (alone): \[tex]$50
- Electric (alone): \$[/tex]60
- Gas (alone): \[tex]$40
- Sewer (alone): \$[/tex]30
- Internet (alone): \[tex]$70
- Cable (alone): \$[/tex]80
- Monthly Housing Payment (roommate): \[tex]$600
- Water (roommate): \$[/tex]25
- Electric (roommate): \[tex]$30
- Gas (roommate): \$[/tex]20
- Sewer (roommate): \[tex]$15
- Internet (roommate): \$[/tex]35
- Cable (roommate): \$40
This detailed explanation shows each step and corresponding calculation that leads to the numerical results provided above.
Thanks for taking the time to read Gross Salary Analysis Income and Tax Information Income Tax Rate Percentage tex qquad tex FICA Tax Percentage tex qquad tex Total Income and FICA Tax. We hope the insights shared have been valuable and enhanced your understanding of the topic. Don�t hesitate to browse our website for more informative and engaging content!
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