Round to the nearest penny.
You have a part-time job that pays $4.75/hr with tips averaging $4.50/hr. Your deductions are FICA (7.65%), federal tax withholding (12.5%), and state tax withholding (6.85%). You work 20 hours per week.
You want to save $40.00/wk, how much is left of your discretionary income per week? Assume that all of the income from your part-time job is discretionary.
First, calculate your total income per week:
Hourly wage: $4.75/hr
Tip: $4.50/hr
Total hourly income: $4.75/hr + $4.50/hr = $9.25/hr
Total income per week: $9.25/hr x 20 hrs = $185.00
Next, calculate the total deductions:
FICA: 7.65% of $185.00 = $14.15
Federal tax withholding: 12.5% of $185.00 = $23.13
State tax withholding: 6.85% of $185.00 = $12.65
Total deductions: $14.15 + $23.13 + $12.65 = $49.93
Subtract the total deductions from the total income to find your discretionary income:
Discretionary income per week: $185.00 - $49.93 = $135.07
Since you want to save $40.00 per week, subtract that from your discretionary income:
Amount left of discretionary income per week: $135.07 - $40.00 = $95.07
Therefore, the amount left of your discretionary income per week is $95.07.