Question

Use the following tax rates, ceiling and maximum taxes: | |||

Employee and Employer OASDI: | 6.20% | $127,200 | $7,886.40 |

Employee* and Employer HI: | 1.45% | No limit | No maximum |

Self-employed OASDI: | 12.4% | $127,200 | $15,772.80 |

Self-employed HI: | 2.9% | No limit | No maximum |

*Employee HI: Plus an additional 0.9% on wages over $200,000. Also applicable to self-employed.

Rounding Rules: Unless instructed otherwise compute hourly rate and overtime rates as follows:

Carry the hourly rate and the overtime rate to 3 decimal places and then round off to 2 decimal places (round the hourly rate to 2 decimal places before multiplying by one and one-half to determine the overtime rate).

If the third decimal place is 5 or more, round to the next higher cent.

If the third decimal place is less than 5, drop the third decimal place.

Also, use the minimum hourly wage of $7.25 in solving these problems and all that follow.

On the last weekly pay
of the first quarter, Lorenz is paid her current pay of $90 per day
for four days worked and one day sick pay (total — $450). She is
also paid her first-quarter commission of $1,200 in this pay. How
much will be deducted for:

Round your answers to the nearest cent.

a. OASDI tax |
$_______ |

b. HI tax |
$_________ |

Answer #1

The maximum 2017 OASDI portion of the Federal Insurance Contributions Act tax payable by each employee is $7,886.40, or 6.2 percent of the wage base. For tax year 2017, the 6.2 percent applies to the employer tax rate on the first $127,200 of taxable wages paid to an employee in the year. The employee tax rate is also 6.2 percent.

For the Medicare (HI) portion of the FICA taxes, there is no wage base and all wages earned are subject to the HI tax, which also is paid by employers and employees. The 1.45 percent HI tax is applied to all wages earned in a tax year. In tax year 2017.

Total taxable wage:

Normal wage (90*5). 450

Commission. 1200

**1650**

a. OASDI tax(1650*0.062) =$102.30

b. HI tax(1650*0.0145). =$23. 93

Note: In this
chapter and in all succeeding work throughout the course,
unless instructed otherwise, calculate
hourly rates and overtime rates as follows:
1.
Carry the hourly rate and the overtime rate to 3
decimal places and then round off to 2 decimal places (round the
hourly rate to 2 decimal places before multiplying by one and
one-half to determine the overtime rate).
2.
If the third decimal place is 5 or more, round to
the next higher cent.
3....

Compute hourly rate and overtime rates as follows:
1.
Carry the hourly rate and the overtime
rate to 3 decimal places and then round off to 2 decimal places
(round the hourly rate to 2 decimal places before multiplying by
one and one-half to determine the overtime rate).
2.
If the third decimal place is 5 or more,
round to the next higher cent.
3.
If the third decimal place is less than 5,
drop the third decimal place.
Also,...

Compute hourly rate and overtime rates as follows:
1.
Carry the hourly rate and the overtime
rate to 3 decimal places and then round off to 2 decimal places
(round the hourly rate to 2 decimal places before multiplying by
one and one-half to determine the overtime rate).
2.
If the third decimal place is 5 or more,
round to the next higher cent.
3.
If the third decimal place is less than 5,
drop the third decimal place.
Also,...

Using the payroll tax rates discussed in the text and the
maximum taxable wage bases for 2003 of $87,000, calculate the
payroll tax (OASDI and HI combined) that would be paid by the
employee and employer for each of the following amounts (a) 20,000;
(b) 35,000; (c) 50,000; (d) 100,000; and (e) 150,000.

Note: In this chapter and in all succeeding work throughout the
course, unless instructed otherwise, calculate hourly rates and
overtime rates as follows: 1. Carry the hourly rate and the
overtime rate to 3 decimal places and then round off to 2 decimal
places (round the hourly rate to 2 decimal places before
multiplying by one and one-half to determine the over-time rate).
2. If the third decimal place is 5 or more, round to the next
higher cent. 3....

Note: In this
chapter and in all succeeding work throughout the course,
unless instructed otherwise, calculate
hourly rates and overtime rates as follows:
1.
Carry the hourly rate and the overtime rate to 3
decimal places and then round off to 2 decimal places (round the
hourly rate to 2 decimal places before multiplying by one and
one-half to determine the overtime rate).
2.
If the third decimal place is 5 or more, round to
the next higher cent.
3....

Note: In this
chapter and in all succeeding work throughout the course,
unless instructed otherwise, calculate
hourly rates and overtime rates as follows:
1.
Carry the hourly rate and the overtime rate to 3
decimal places and then round off to 2 decimal places (round the
hourly rate to 2 decimal places before multiplying by one and
one-half to determine the overtime rate).
2.
If the third decimal place is 5 or more, round to
the next higher cent.
3....

a. Cal Ruther, an employer, is subject to FICA
taxes but exempt from FUTA and SUTA taxes. During the last quarter
of the year, his employees earned monthly wages of $9,600, all of
which is taxable. The amount of federal income taxes withheld each
month is $1,250. Journalize the payment of wages, and record the
payroll tax on November 30.
If an amount box does not require an entry, leave it blank or
enter "0". When required, round your answers...

Sheila Williams, a
medical secretary, earns $2,600 monthly for a 36-hour week. For
overtime work, she receives extra pay at the regular hourly rate up
to 40 hours and time and one-half beyond 40 hours in any week.
During one semimonthly pay period, Williams worked 10 hours
overtime. Only 2 hours of this overtime were beyond 40 hours in any
one week. Compute the following amounts.
Round all
divisions to two decimal places and use the rounded amounts in
subsequent...

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