Question

Paloma Co. has four employees. FICA Social Security taxes are 6.2% of the first $118,500 paid to each employee, and FICA Medicare taxes are 1.45% of gross pay. Also, for the first $7,000 paid to each employee, the company’s FUTA taxes are 0.6% and SUTA taxes are 2.15%. The company is preparing its payroll calculations for the week ended August 25. Payroll records show the following information for the company’s four employees.

						Current Week
Name	Gross Pay through Aug. 18					Gross Pay					Income Tax Withholding
Dali		$	115,600				$	3,000				$	426
Trey			116,150					2,350					379
Kiesha			8,100					550					48
Chee			2,050					500					38

In addition to gross pay, the company must pay one-half of the $80 per employee weekly health insurance; each employee pays the remaining one-half. The company also contributes an extra 8% of each employee’s gross pay (at no cost to employees) to a pension fund.

Required:

Compute the following for the week ended August 25. (Round your intermediate calculations and final answers to 2 decimal places.):

1) Employees' FICA Withholdings for Social SecurityEmployeeEarnings Subject to TaxTax RateTax AmountDaliTreyKieshaCheeTotal$0.002) Employees' FICA Withholdings for MedicareEmployeeEarnings Subject to TaxTax RateTax AmountDaliTreyKieshaCheeTotal$0.003) Employer's FICA Taxes for Social SecurityEmployeeEarnings Subject to TaxTax RateTax AmountDaliTreyKieshaCheeTotal$0.004) Employer's FICA Taxes for MedicareEmployeeEarnings Subject to TaxTax RateTax AmountDaliTreyKieshaCheeTotal$0.005) Employer's FUTA TaxesEmployeeEarnings Subject to TaxTax RateTax AmountDaliTreyKieshaCheeTotal$0.006) Employer's SUTA TaxesEmployeeEarnings Subject to TaxTax RateTax AmountDaliTreyKieshaCheeTotal$0.007) Each Employee's Net (take-home) PayEmployeeDaliTreyKieshaCheeTotalGross Pay$3,000.00$2,350.00$550.00$500.00$6,400.00Income tax withholding426.00379.0048.0038.00891.00FICA - Social Security0.00FICA - Medicare0.00Health Insurance0.00Net Pay$0.008) Total Payroll Related Expense for Each EmployeeEmployeeDaliTreyKieshaCheeTotalGross Pay$3,000.00$2,350.00$550.00$500.00$6,400.00FICA - Social Security0.000.000.000.000.00FICA - Medicare0.000.000.000.000.00FUTA0.000.000.000.000.00SUTA0.000.000.000.000.00Health Insurance0.00Pension0.00Total Payroll Expense$3,000.00$2,350.00$550.00$500.00$6,400.00

Answer 1

1.Employee FICA withholding for Social Secutiry
Employee	Employee earnings	Tax rate	Tax Amount
	subject to tax
Dali	2900.00	6.20%	179.80
Trey	2350.00	6.20%	145.70
Kiesha	550.00	6.20%	34.10
Chee	500.00	6.20%	31.00
Total	6300.00		390.60
Working:
Gross Salary upto Aug.25
	Gross pay	Current	Gross pay	Earnings	Earnings
	through august 18	week pay	upto Aug.25	Limit	Subjectto tax
Dali	115600	3000	118600	118500	2900
Trey	116150	2350	118500	118500	2350
Kiesha	8100	550	8650	118500	550
Chee	2050	500	2550	118500	500
Since Dali is crossing the earnings limit during the curent week, her earnings
subject to tax will be $2,900.

2.Employee FICA withholding for Medicare
Employee	Employee earnings	Tax rate	Tax Amount
	subject to tax
Dali	3000.00	1.45%	43.50
Trey	2350.00	1.45%	34.08
Kiesha	550.00	1.45%	7.98
Chee	500.00	1.45%	7.25
Total	6400.00		92.80

3.Employer's FICA taxes for for Social Secutiry
Employee	Employee earnings	Tax rate	Tax Amount
	subject to tax
Dali	2900.00	6.20%	179.80
Trey	2350.00	6.20%	145.70
Kiesha	550.00	6.20%	34.10
Chee	500.00	6.20%	31.00
Total	6300.00		390.60
4.Employer's FICA taxes for Medicare
Employee	Employee earnings	Tax rate	Tax Amount
	subject to tax
Dali	3000.00	1.45%	43.50
Trey	2350.00	1.45%	34.08
Kiesha	550.00	1.45%	7.98
Chee	500.00	1.45%	7.25
Total	6400.00		92.80

5.Employer's FUTA taxes
Employee	Employee earnings	Tax rate	Tax Amount
	subject to tax
Dali	0.00	0.60%	0.00
Trey	0.00	0.60%	0.00
Kiesha	0.00	0.60%	0.00
Chee	500.00	0.60%	3.00
Total	500.00		3.00
6.Employer's SUTA taxes
Employee	Employee earnings	Tax rate	Tax Amount
	subject to tax
Dali	0.00	2.15%	0.00
Trey	0.00	2.15%	0.00
Kiesha	0.00	2.15%	0.00
Chee	500.00	2.15%	10.75
Total	500.00		10.75
Since the earnings limit for FUTA and SUTAtaxes is $7,000
FUTA and SUTA taxes are payable only on earnings of Chee.

7. Each employes net (Take home) pay
Employe	Total Gross pay	Withholdings				Total Withholding	Net Pay
		Income tax	FICA		Health
			Social cecurity	Medicare	Insurance
Dali	3000.00	426.00	179.80	43.50	40.00	689.30	2310.70
Trey	2350.00	379.00	145.70	34.08	40.00	598.78	1751.23
Kiesha	550.00	48.00	34.10	7.98	40.00	130.08	419.93
Chee	500.00	38.00	31.00	7.25	40.00	116.25	383.75
Total	6400.00	891.00	390.60	92.80	160.00	1534.40	4865.60

8. Total pay related expenses for each employe
Employee	Total Gross pay	FICA		FUTA	SUTA	Health	Pension	Total
		Social	Medicare			Insurance	@8% of
		Security					gross pay
Dali	3000.00	179.80	43.50	0.00	0.00	40.00	240.00	503.30
Trey	2350.00	145.70	34.08	0.00	0.00	40.00	188.00	407.78
Kiesha	550.00	34.10	7.98	0.00	0.00	40.00	44.00	126.08
Chee	500.00	31.00	7.25	3.00	10.75	40.00	40.00	132.00
Total	6400.00	390.60	92.80	3.00	10.75	160.00	512.00	1169.15