Question

BMX Company has one employee. FICA Social Security taxes are 6.2% of the first $118,500 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 2.9% of the first $7,000 paid to its employee.

	Gross Pay through August					Gross Pay for September
a.		$	5,500				$	2,300
b.			19,200					3,100
c.			113,200					9,000

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	2300	6.20%	142.60
FICA-Medicare	2300	1.45%	33.35
FUTA	1500	0.60%	9.00
SUTA	1500	2.90%	43.50
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	0	0.60%	0.00
SUTA	0	2.90%	0.00
c)
Tax	September Earnings Subject to Tax	Tax Rate	Tax Amount
FICA-Social Security	5300	6.20%	328.60
FICA-Medicare	9000	1.45%	130.50
FUTA	0	0.60%	0.00
SUTA	0	2.90%	0.00
Note: Earnings taxable for FUTA and SUTA in (a) = 7000-5500 = 1500
Note: Earnings taxable for Social Security in c = 118500-113200 = $5300