Kathy Phelps has a gross income of $1650 semimonthly. She is a single mom and claims three withholding allowances. Find her

take-home pay if her state switches to a flat tax at 3.5% (include health insurance). 

To calculate Kathy Phelps' take-home pay, we need to determine the deductions from her gross income. The deductions include federal withholding tax, state tax, Social Security, Medicare, and health insurance. Given the gross income is $1,650 semimonthly, and she claims three withholding allowances, we will proceed step-by-step:

### Step 1: Calculate Federal Withholding Tax

To calculate the federal withholding tax, we use the IRS withholding tables, but since we don't have the specific table, we can use the general rule of thumb to estimate the tax withholding based on allowances:

1. **Determine the value of each withholding allowance**: For 2023, each withholding allowance reduces taxable income by approximately $170.80 per pay period (assuming semimonthly pay).

2. **Calculate taxable income for federal tax**:
   \[
   \text{Taxable Income} = \text{Gross Income} - (\text{Number of Allowances} \times \text{Value per Allowance})
   \]
   Substituting the values:
   \[
   \text{Taxable Income} = 1650 - (3 \times 170.80) = 1650 - 512.40 = 1137.60
   \]

3. **Estimate Federal Withholding Tax**: This depends on the tax bracket. For now, let's assume a flat percentage of around 10% for a rough estimation.

   \[
   \text{Federal Withholding Tax} \approx 1137.60 \times 0.10 = 113.76
   \]

### Step 2: Calculate State Tax

The state tax is given as a flat rate of 3.5%.

\[
\text{State Tax} = \text{Gross Income} \times \text{State Tax Rate}
\]

\[
\text{State Tax} = 1650 \times 0.035 = 57.75
\]

### Step 3: Calculate Social Security and Medicare

Social Security tax is 6.2% and Medicare tax is 1.45%.

\[
\text{Social Security} = 1650 \times 0.062 = 102.30
\]

\[
\text{Medicare} = 1650 \times 0.0145 = 23.93
\]

### Step 4: Estimate Health Insurance Deduction

We will need an estimate for health insurance. Let's assume a common rate of about $100 per semimonthly pay period.

### Step 5: Calculate Total Deductions and Take-Home Pay

Now, we sum up all the deductions:

\[
\text{Total Deductions} = \text{Federal Tax} + \text{State Tax} + \text{Social Security} + \text{Medicare} + \text{Health Insurance}
\]

\[
\text{Total Deductions} = 113.76 + 57.75 + 102.30 + 23.93 + 100 = 397.74
\]

Then, we find the take-home pay:

\[
\text{Take-Home Pay} = \text{Gross Income} - \text{Total Deductions}
\]

\[
\text{Take-Home Pay} = 1650 - 397.74 = 1252.26
\]

### Kathy Phelps' Estimated Take-Home Pay:

\[
\boxed{1252.26}
\]

### Questions to Explore Further:

1. How would Kathy's take-home pay change if she had fewer or more withholding allowances?
2. How does the flat state tax rate compare to a progressive state tax system in terms of deductions?
3. What impact would an increase in the health insurance premium have on her take-home pay?
4. What if Kathy's gross income were paid on a biweekly basis instead of semimonthly? How would that affect her take-home pay?
5. How would other deductions, such as retirement contributions, affect Kathy's take-home pay?

### Tip:

When calculating take-home pay, always consider the specific deductions that apply to your situation, including retirement plans and additional benefits, to get the most accurate estimate.

Kathy Phelps has a gross income of $1650 semimonthly. She is a single mom and claims three withholding allowances. Find her take-home pay if her state switches to a flat tax at 3.5% (include health insurance).

Calculate Kathy Phelps' take-home pay with a detailed breakdown of federal withholding, state taxes, Social Security, Medicare, and health insurance. Her gross income is $1650 semimonthly, she claims 3 withholding allowances, and the state tax rate is a flat 3.5%. Suitable for high school students learning about income tax calculations.

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