Question

1. If you are the employer, list, and be very specific of all taxes that the employee and you (the employer) must pay on each employee per year.

2. Figure the net pay on an employee who earns $15.00 an hour at 40 hours a week. Figure the federal income tax at 20% of gross. Don't forget to deduct FICA and Medicare.

Answer 1

1.

The employer and employee both required to pay the social security tax and Medicare taxes, this taxes liability arises to both the employees and employers. The social security tax rate = 6.2% of gross income upto the $137,700 and Medicare taxes = 1.45% with no upper limit, but additional medicare taxes @ 0.9% for income above $ 200,000.

certain taxes are only paid by the employer, no liability for employee this are Federal unemployment taxes and State unemployment taxes i.e FUTA @ 0.6% and SUTA (tax rates depend on each states ) taxes for each employee upto gross wages of $ 7000 .

Certain taxes, are only paid by employees as a part of deduction from gross pay , this are federal Income taxes and state income taxes etc.

2.

Here, the employee earns $15 per hours and worked for 40 hours a week.

Thus Gross pay = Hours worked * Rate per hour

Gross pay = 40 * $ 15

Gross Pay = $ 600

Deductions which are required to be made from the gross pay are the Social security taxes @6.2% and Medicare taxes @ 1.45% and Federal income tax @ 20%

Social security taxes = $ 600 * 6.2% = $ 37.20  

Medicare taxes = $ 600 * 1.45% = $ 8.7

Federal Income tax = $600 * 20% = $ 120

Deductions = Social security taxes + medicare taxes + Federal income taxes = $ 37.20 + 8.70 + $ 120

Total Deductions = $ 165.90

Thus, Net Pay = Gross Pay - Deductions

Net Pay = $ 600 - $ 165.90

Net Pay of the employee = $ 434.10