Question

# 1. Solve the following problem using 6.2%, up to \$113,700, for social security tax and 1.45%,...

1.

Solve the following problem using 6.2%, up to \$113,700, for social security tax and 1.45%, no wage limit, for Medicare tax.

As payroll manager for Freeport Enterprises, it is your task to calculate the monthly social security and Medicare withholdings for the following employees.

 Employee Year-to-Date Earnings Current Month Social Security Medicare Graham, C. \$14,800 \$1,540 \$ \$

2.

Dave O'Bannon earns \$41,450 annually as a line supervisor for Redwood Manufacturers.

a. If the SUTA tax rate is 5.4% of the first \$7,000 earned in a year, how much SUTA tax must Redwood pay each year for Dave?

\$

b. If the FUTA tax rate is 6.0% of the first \$7,000 earned in a year minus the SUTA tax paid, how much FUTA tax must the company pay each year for Dave?

\$

1.

 Employe Year-to-date Current Social Medicare Earnings Month Security Graham, C. 14800 1540 95.48 22.33 Since the year-to-date earnings are below \$117,000 social security tax is deductible on the full amount of \$1,540.

2.

a. \$378.00

b. \$42.00

Working:

 a. SUTA payable (5.4%) 378.00 (5.4% of 7,000) b. FUTA (6% - SUTA) 42.00 (6% of 7,000) - 378

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