Accounting/Payroll: Can't figure out how to calculate cafeteria plan from Net Pay with federal,SS, and Medicare tax deductions

Question

Sorry for the long question, but I can't figure out this problem:

 

"Will and Eric are looking at the company's health care options and trying to determine what their taxable income will be if they sign up for the qualified cafeteria plan offered by the company, which will allow them to deduct the health care contributions pre-tax. Will, a single man with one deduction, earns $1,600 per semimonthly payroll. Eric, a married man with six deductions, earns $1,875 per semimonthly pay period. The semimonthly employee contribution to health care that would be subject to the cafeteria plan is $75 for Will, $250 for Eric. Compute the net pay for Will and Eric. Assume that they are subject to Federal income tax (using the wage-bracket method in Appendix C.) and FICA taxes and have no other deductions from their pay."

 

I figured out the solution for when they decline the cafeteria plan (A: 1294,1681). But when they do participate in the cafeteria plan, I'm drawing a blank.

 

I know that:

Gross pay= 1,600 - 75 (cafeteria plan) = 1525

1,875 - 250 = 1625

 

But I can't figure out how to get the amount of federal income tax, social security tax, and Medicare tax to deduct from them.  

 

Answer 1

Tiffany:

 

Your Appendix C should tell you how much the tax rate is for various earning levels per pay period.

 

The Social Security and Medicare taxes combine to be 7.65%  (so, time 0.0765) of the full earnings for each person.

 

The taxable amount in Appendix C apply to the amounts after the Cafeteria Plan deductions.