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.		$	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).

Answer 1

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

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