Calculate the employer’s portion of the FICA taxes, identify whether any of the employees exceed the taxable wage base during the year and if any identify the pay day it would occur.
Explanation of Solution
FICA tax refers to the Federal Insurance Contribution Act tax which is Country U.S law that creates the payroll tax requiring deductions.
FICA imposes two taxes on the employer and the employee. In this, one tax would finances the federal old age, survivors and disability insurance programs which would be called as the OASDI. The other tax would finance the hospital insurance (HI) or the Medicare program.
Calculate the employer’s portion of the FICA taxes.
Employee | Weekly wage | OASDI | HI |
Employee TW (1) | $ 225.00 | $ 13.95 | $ 3.26 |
Employee BY (2) | $ 300.00 | $ 18.60 | $ 4.35 |
Employee HF (3) | $ 175.00 | $ 10.85 | $ 2.54 |
Employee CC (4) | $ 1,000.00 | $ 62.00 | $ 14.50 |
Employee BM (5) | $ 2,524.00 | $ 156.49 | $ 36.60 |
Totals | $ 4,224.00 | $ 261.89 | $ 61.25 |
Table (1)
Working note (1):
Calculate the OASDI and HI for Employee TW.
Working note (2):
Calculate the OASDI and HI for Employee BY.
Working note (3):
Calculate the OASDI and HI for Employee HF.
Working note (4):
Calculate the OASDI and HI for Employee CC.
Working note (5):
Calculate the OASDI and HI for Employee BM
Identify whether any of the employees exceed the taxable wage base during the year:
It is identified that Employee BM would exceed the taxable wage base during the year. As Employee BM, would earn an annual wage of $131,248
During the 50th weekly pay day, Employee BM would have a cumulative wages of $126,200
Particulars | Amount ($) | Amount ($) |
Cumulative wages taxes | 126,200 | |
Current wage payment | 2,524 | |
Total wages | 128,724 |
Table (2)
Thus, the total amount taxable is $2,200
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Chapter 3 Solutions
PAYROLL ACCT.,2019 ED.(LL)-TEXT
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