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.		$	6,500				$	1,900
b.			3,000					3,100
c.			124,100					10,000

rev: 05_16_2019_QC_CS-168714

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	1900	6.20%	117.80
FICA-Medicare	1900	1.45%	27.55
FUTA	500	0.60%	3.00
SUTA	500	5.40%	27.00
b)
Tax	September Earnings Subject to Tax	Tax Rate	Tax Amount
FICA-Social Security	3100	6.20%	192.20
FICA-Medicare	3100	1.45%	44.95
FUTA	3100	0.60%	18.60
SUTA	3100	5.40%	167.40
c)
Tax	September Earnings Subject to Tax	Tax Rate	Tax Amount
FICA-Social Security	4300	6.20%	266.60
FICA-Medicare	10000	1.45%	145.00
FUTA	0	0.60%	0.00
SUTA	0	5.40%	0.00
Note: Earnings taxable for FUTA and SUTA in (a) = 7000-6500 = $500
Note: Earnings taxable for Social Security in (c) = 128400-124100 = $4300