Stacy thinks her employer may not be withholding the correct amount from her paychecks for state income tax. She made arrangements to have 19% of federal income tax withheld for state income tax. On her last paycheck, the federal withholding was $163.88 and her state income tax withholding was $24.58. Which of the following statements is true?
a.
Stacy’s employer is withholding the correct amount for state income tax.
b.
Stacy’s employer is withholding too little for state income tax.
c.
Stacy’s employer is withholding too much for state income tax.
d.
Stacy’s employer should not be withholding state income tax.
b. Stacy’s employer is withholding too little for state income tax.
To determine if Stacy's employer is withholding the correct amount for state income tax, we need to compare the actual state income tax withholding with the expected state income tax withholding based on the arrangement of 19% of federal income tax.
Stacy's federal income tax withholding is $163.88. To find the expected state income tax withholding, we can calculate 19% of the federal withholding:
19% of $163.88 = $31.19
Comparing the expected withholding ($31.19) with the actual withholding ($24.58), we can see that Stacy's employer is withholding too little for state income tax.
Therefore, the correct answer is:
b. Stacy’s employer is withholding too little for state income tax.