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Big Pine Tree Service has 18 employees, 12 with gross earnings of $350 per week and 6 with gross earnings of $425 per week. What are the employee's share and the employer's share of the social security and Medicare tax for the first quarter of the year?

Big Pine Tree Service has 18 employees, 12 with gross earnings of $350 per week and 6 with gross earnings of $425 per week. What are the employee's share and the employer's share of the social security and Medicare tax for the first quarter of the year?

College Accounting (Book Only): A Career Approach
College Accounting (Book Only): A Career Approach
13th Edition
ISBN:9781337280570
Author:Scott, Cathy J.
Publisher:Scott, Cathy J.
Chapter8: Employer Taxes, Payments, And Reports
Section: Chapter Questions
Problem 4E
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and multiply by 13 weeks to find the total quarterly amount withheld from all employees. The SOLUTIONSTRATEGY To solve for the total FICA tax due quarterly from the employees and the employer, calculate the tax due per employee per week, multiply by 25 to find the total weekly FICA for all employees, employer's share will be an equal amount. a. Social security tax = Gross earnings x 6.2% = 250 × .062 = $15.50 Medicare tax = Gross earnings x 1.45% = 250 x .0145 = $3.63 Total FICA tax per employee per week = 15.50 + 3.63 = $19.13 b. Total FICA tax per week = FICA tax per employee x 25 employees Total FICA tax per week =19.13 x 25 = $478.25 Total FICA tax first quarter = Total FICA tax per week x 13 weeks Total FICA tax first quarter = 478.25 x 13 = $6,217.25 Total FICA tax first quarter-Employee's share = $6,217.25 Total FICA tax first quarter-Employer's share = $6,217.25 TRYITEXERCISE 13 Big Pine Tree Service has 18 employees, 12 with gross earnings of $350 per week and 6 withn gross earnings of $425 per week, What are the employee's share and the employer's share of the social security and Medicare tax for the first quarter of the year? CHECK YOUR ANSWERS WITH THE SOLUTIONS ON PAGE 304. SELF-EMPLOYMENT TAX The self-employment tax, officially known as the Self-Employment Contributions Act (SECA) tax, is the self-employed person's version of the FICA tax. It is due on the net earnings from self-employment. Self-employed persons are responsible for social security and Medicare taxes at twice the rate deducted for employees. Technically, they are the employee and the employer and therefore must pay both shares. For a self-employed person, the social security and Medicae tax rates are twice the normal rates, as follows: Tax Rate Wage Base $128,400 12.4% (6.2% × 2) 2.9% (1.45% × 2) Social Security No limit Medicare CALCULATING SELF- EMPLOYMENT TAX IDLE14
Transcribed Image Text:and multiply by 13 weeks to find the total quarterly amount withheld from all employees. The SOLUTIONSTRATEGY To solve for the total FICA tax due quarterly from the employees and the employer, calculate the tax due per employee per week, multiply by 25 to find the total weekly FICA for all employees, employer's share will be an equal amount. a. Social security tax = Gross earnings x 6.2% = 250 × .062 = $15.50 Medicare tax = Gross earnings x 1.45% = 250 x .0145 = $3.63 Total FICA tax per employee per week = 15.50 + 3.63 = $19.13 b. Total FICA tax per week = FICA tax per employee x 25 employees Total FICA tax per week =19.13 x 25 = $478.25 Total FICA tax first quarter = Total FICA tax per week x 13 weeks Total FICA tax first quarter = 478.25 x 13 = $6,217.25 Total FICA tax first quarter-Employee's share = $6,217.25 Total FICA tax first quarter-Employer's share = $6,217.25 TRYITEXERCISE 13 Big Pine Tree Service has 18 employees, 12 with gross earnings of $350 per week and 6 withn gross earnings of $425 per week, What are the employee's share and the employer's share of the social security and Medicare tax for the first quarter of the year? CHECK YOUR ANSWERS WITH THE SOLUTIONS ON PAGE 304. SELF-EMPLOYMENT TAX The self-employment tax, officially known as the Self-Employment Contributions Act (SECA) tax, is the self-employed person's version of the FICA tax. It is due on the net earnings from self-employment. Self-employed persons are responsible for social security and Medicare taxes at twice the rate deducted for employees. Technically, they are the employee and the employer and therefore must pay both shares. For a self-employed person, the social security and Medicae tax rates are twice the normal rates, as follows: Tax Rate Wage Base $128,400 12.4% (6.2% × 2) 2.9% (1.45% × 2) Social Security No limit Medicare CALCULATING SELF- EMPLOYMENT TAX IDLE14
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