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?
Answer
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.
Explanation
The expected state withholding is 19% of the federal withholding: $163.88 × 0.19 = about $31.14. Stacy’s employer withheld only $24.58, which is less than $31.14, so the employer is withholding too little for state income tax.
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