Question

Barbara is an employee of Baltimore Company. Baltimore Company pays employees the Friday after the wages are earned. Overtime in excess of 40 hours must be paid at 150% of the normal hourly rate.  Social Security taxes are 6.2% and Medicare taxes are 1.45%. The federal unemployment tax rate is 1.2% and the state unemployment tax rate is 4.0%. Barbara's wages, including the current pay period, will not exceed the limits for Social Security, Medicare and unemployment taxes. Barbara earns $19 per hour and worked 47 hours for the week ended January 13 , 2019. Baltimore will withhold $220 federal income taxes. Use this information to determine the total payroll tax expense for Baltimore Company as related to Barbara's earnings. (Round to the closest cent)

Answer 1

Solution:

Normal Wage Rate = $19 per hour.

Overtime Wage Rate = $19 *150% = $28.5 per hour.

Barbara Normal Income = $19 * 40 hours = $760.

Barbara Overtime Income = (47 - 40) hours * $ 28.5 = $199.5

Total Earnings = $ (760 + 199.5) = $959.5

Social Security Tax = $959.5 * 6.2% = $59.49

Medicare Taxes = $959.5 * 1.45% = $13.91

Federal Unemployment Tax = $959.5 * 1.2% = $11.51

State Unemployment Tax = $959.5 * 4.0% = $38.38

Total Payroll expenses for Batlimore company is total of all taxes including extra $220 federal Income Tax.

= $(59.49 + 13.91 + 11.51 + 38.38)

= $123.29 or $123

Therefore, $123.29 or $123 will be the total payroll tax expense for Baltimore company.