Question

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?

$

Answer 1

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