Question

# BMX Company has one employee. FICA Social Security taxes are 6.2% of the first \$128,400 paid...

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. \$ 5,200 \$ 2,400 b. 2,350 2,450 c. 122,800 8,700

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).

Ans:

 a) Tax Earnings Subject to Tax Tax Rate Tax Amount FICA-Social Security 2400 6.20% 148.8 FICA-Medicare 2400 1.45% 34.8 FUTA 1800 0.60% 10.8 SUTA 1800 5.40% 97.2 b) Tax September Earnings Subject to Tax Tax Rate Tax Amount FICA-Social Security 2450 6.20% 151.9 FICA-Medicare 2450 1.45% 35.525 FUTA 2450 0.60% 14.7 SUTA 2450 5.40% 132.3 c) Tax September Earnings Subject to Tax Tax Rate Tax Amount FICA-Social Security 5600 6.20% 347.2 FICA-Medicare 8700 1.45% 126.15 FUTA 0 0.60% 0 SUTA 0 5.40% 0 Note: Earnings taxable for FUTA and SUTA in (a) = 7000-5200 = 1800 Note: Earnings taxable for Social Security in (c) = 128400-122800 = 5600

Hope this helped ! Let me know in case of any queries.

#### Earn Coins

Coins can be redeemed for fabulous gifts.