Question

An employer has one employee who earned $3,000 his first month of employment. The employee’s federal income tax withholding (FITW) is $400, and the employee has voluntary monthly deductions of $125 for health insurance and $25 for union dues. The FICA tax rate for Social Security is 6.2% and the FICA tax rate for Medicare is 1.45%. The employer's FUTA tax rate is 0.6% and the SUTA tax rate is 5.4%. (Note: The limit for FICA Social Security is $128,400 and there is no limit for FICA Medicare. The limit is $7,000 for FUTA and $9,000 for SUTA.) What are the employee's total deductions for the first month of the year?

An employer has one employee who earned $3,000 his first month of employment. The employee’s federal income tax withholding (FITW) is $400, and the employee has voluntary monthly deductions of $125 for health insurance and $25 for union dues. The FICA tax rate for Social Security is 6.2% and the FICA tax rate for Medicare is 1.45%. The employer's FUTA tax rate is 0.6% and the SUTA tax rate is 5.4%. (Note: The limit for FICA Social Security is $128,400 and there is no limit for FICA Medicare. The limit is $7,000 for FUTA and $9,000 for SUTA.) What is the employee's net pay for the first month of the year?

Answer 1

Req 1:
Total Deductions for the first month of Pay:
FICA social security tax (3000*6.2%)				186
FICA Medicare (3000*1.45%)				43.5
Federal Income tax witholding				400
Voluntary Contribution to health insurance				125
Union dues				25
Total Deductions from Employee pay				779.5
Rreq 2:
Net pay of the employee:
Gross Pay of the month				3000
Less: Total Deductions as computed above				779.5
Net pay of the employee:				2220.5