Question

Mest Company has nine employees. FICA Social Security taxes are 6.2% of the first $127,200 paid to each employee, and FICA Medicare taxes are 1.45% of gross pay. FUTA taxes are 0.6% and SUTA taxes are 5.4% of the first $7,000 paid to each employee. Cumulative pay for the current year for each of its employees follows.

Employee	Cumulative Pay		Employee	Cumulative Pay		Employee	Cumulative Pay
Ken S	$	6,300	Michelle W	$	153,000	Lori K	$	139,200
Tim V		52,300	Michael M		116,400	Kitty O		46,400
Steve S		96,500	Zach R		136,700	John W		13,500

a. Compute the amounts in this table for each employee.

		Pay Subject to	Pay Subject	Pay Subject	Pay Subject
	Cumulative	FICA Social	to FICA	to FUTA	to SUTA
Employee	Pay	Security	Medicare	Taxes	Taxes
Ken S	$6,300
Tim V	52,300
Steve S	96,500
Michelle W	153,000
Michael M	116,400
Zach R	136,700
Lori K	139,200
Kitty O	46,400
John W	13,500
Totals	$760,300	$9,617	$0	$0	$0

b. For the company, compute each total for: FICA Social Security taxes, FICA Medicare taxes, FUTA taxes, and SUTA taxes.

	Tax Paid by Employee Tax Paid by Employer Total Tax FICA Social Security taxes FICA Medicare taxes FUTA taxes SUTA taxes

Answer 1

1) FUTA is federal unemployment tax rate and is paid by employer. It is limited to the extent of 7000 per employee.

2) SUTA is a State unemployment tax rate and is generally paid by employer. Although in some states it might be charged as withholding tax from employee salary. Here the problem is solved assuming the taxes are paid by employer.

3) The FICA Social Security and Medicare is charged as withholding tax from employee at 6.2% and 1.45% respectively. A percentage equivalent to the same is contributed by the employer as well.