Using the percentage method, total biweekly deductions for federal income, social security and Medicare taxes?

• A. $252.51
• B. $245.01
• C. $114.96
• D. $299.66

Answer: (B)

The key idea is that biweekly deductions using the percentage method come from adding three pieces: federal income tax withholding computed from the employee’s gross pay using the IRS percentage method tables (based on the number of withholding allowances on the W-4), Social Security tax at 6.2% on gross wages (up to the annual wage base), and Medicare tax at 1.45% on all wages. After applying the FITW amount for the biweekly period and calculating the two FICA taxes on the gross amount, these withholdings are summed to get the total biweekly deductions.

In this scenario, when you apply the percentage method for federal income tax and add Social Security and Medicare taxes at their standard rates, the total comes to 245.01. The other options would not align with the combination of FITW (per the withholding tables) and FICA (6.2% plus 1.45%), given the wages and allowances in the problem, so 245.01 is the correct total.