Question

BMX Company has one employee. FICA Social Security taxes are 6.2% of the first $128,400 paid to its employee, and FICA Medicare taxes are 1.45% of gross pay. For BMX, its FUTA taxes are 0.6% and SUTA taxes are 5.4% of the first $7,000 paid to its employee.

	Gross Pay through August 31						Gross Pay for September
a.		$	6,400					$	800
b.			2,000						2,100
c.			122,100						8,000

Compute BMX’s amounts for each of these four taxes as applied to the employee’s gross earnings for September under each of three separate situations (a), (b), and (c). (Round your answers to 2 decimal places.)

Answer 1

a)
Tax	September Earnings Subject to Tax	Tax Rate	Tax Amount
FICA-Social Security	800	6.20%	49.60
FICA-Medicare	800	1.45%	11.60
FUTA	600	0.60%	3.60
SUTA	600	5.40%	32.40
b)
Tax	September Earnings Subject to Tax	Tax Rate	Tax Amount
FICA-Social Security	2100	6.20%	130.20
FICA-Medicare	2100	1.45%	30.45
FUTA	2100	0.60%	12.60
SUTA	2100	5.40%	113.40
c)
Tax	September Earnings Subject to Tax	Tax Rate	Tax Amount
FICA-Social Security	6300	6.20%	390.60
FICA-Medicare	8000	1.45%	116.00
FUTA	0	0.60%	0.00
SUTA	0	5.40%	0.00
Note: Earnings taxable for FUTA and SUTA in (a) = 7000-6400 = $600
Note: Earnings taxable for Social Security in c = 128400-122100 = $6300