Question

Employee earnings records for Crane Company reveal the following gross earnings for four employees through the pay period of December 15.

J. Seligman		$87,600		L. Marshall		$108,100
R. Eby		$105,500		T. Olson		$130,000

For the pay period ending December 31, each employee’s gross earnings is $4,500. The FICA tax rate is 7.65% on gross earnings of $127,200.

Compute the FICA withholdings that should be made for each employee for the December 31 pay period

Answer 1

	J. Seligman	R. Eby	L. Marshall	T. Olson
Total earnings subject to FICA tax	127,200	127,200	127,200	127,200
Gross earnings through the pay period of December 15.	87,600	105,500	108,100	130,000
Gross earnings For the pay period ending December 31	4,500	4,500	4,500	4,500
Total earnings	92,100	110,000	112,600	134,500
Earnings subject to FICA tax For the pay period ending December 31 (i)	4,500	4,500	4,500	0
FICA tax rate (ii)	7.65%	7.65%	7.65%	7.65%
FICA tax withholdings (i) x (ii)	$344.25	$344.25	$344.25	0

T. Olson' total earnings have crossed the FICA tax base earnings, hence no FICA taxes can be withheld from his earnings.