At Christmas time, companies often give employees a small Christmas bonus. If th

Question

At Christmas time, companies often give employees a small Christmas bonus. If the bonus was in the form of food, and the cost did not exceed $25, the bonus is not taxable. Any type of cash payment is taxable. Assume that we want to make sure that we allow for the FICA tax and that Federal Withholding is not going to be affected. The Employee portion of FICA tax is 7.65 percent. If you gave an employee $200, you would have to take out.0765 200 out of the bonus Suppose that the owner would like to give out $100 bills at the Christmas party. What does the Gross Bonus have to be so that after the FICA tax is removed, it leaves a net amount of $200? Your Answer: Answer

Explanation / Answer

let the gross amount be x
tax deducted = 7.65 % of x = 0.0765*x
payment = x - 0.0765*x

This payment is 200

so,
x - 0.0765*x = 200
0.9235*x = 200
x = $217

Answer: $217

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.