UpStudy Free Solution:
To determine which of the options would affect an employee’s net pay, let’s analyze each choice:
You are viewing: Which Of The Following Would Affect An Employee’s Net Pay
a. Opting out of their employer’s dental insurance plan and putting the money saved into their employer’s health insurance plan:
– This would likely not affect the employee’s net pay since the money saved from the dental plan is being redirected to the health insurance plan. The overall deductions from the paycheck remain similar.
b. Claiming a different number of dependents and thereby reducing their income tax withholdings:
– This would affect the employee’s net pay. Claiming more dependents reduces the amount of income tax withheld from each paycheck, resulting in higher net pay.
c. Getting a raise and putting the extra money into a 401(k) plan:
– While getting a raise increases gross pay, putting the extra money into a 401(k) plan (pre-tax) would reduce the taxable income, potentially keeping the net pay relatively unchanged. However, the net pay might still increase slightly due to the raise, but it’s primarily the gross pay that is affected.
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d. Receiving a bonus in the form of extra vacation days:
– This would not affect the employee’s net pay directly as vacation days are a form of non-monetary compensation.
The best answer from the choices provided is:
B. Claiming a different number of dependents and thereby reducing their income tax withholdings
Supplemental Knowledge
Net Pay
Net pay, also known as take-home pay, is the amount of an employee’s earnings that remains after all deductions have been taken out. These deductions can include federal and state taxes, Social Security, Medicare, health insurance premiums, retirement contributions, and other voluntary deductions.
Analysis of Options
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– Option A: Opting out of their employer’s dental insurance plan and putting the money saved into their employer’s health insurance plan.
– This option involves reallocating funds between different types of insurance plans. While it might change the distribution of pre-tax benefits, it does not directly affect net pay since both are typically pre-tax deductions.
– Option B: Claiming a different number of dependents and thereby reducing their income tax withholdings.
– Changing the number of dependents claimed on tax forms (like the W-4 in the U.S.) directly affects the amount of income tax withheld from each paycheck. Reducing tax withholdings increases net pay.
– Option C: Getting a raise and putting the extra money into a 401(k) plan.
– While getting a raise increases gross pay, contributing more to a 401(k) plan (a pre-tax retirement savings account) offsets this increase by reducing taxable income. The net effect on net pay depends on the balance between the raise and additional contributions.
– Option D: Receiving a bonus in the form of extra vacation days.
– Extra vacation days are a non-monetary benefit and do not affect net pay directly. They provide value in terms of time off but do not change take-home earnings.
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Category: WHICH
