Question

Gary Marks is paid on a monthly basis. For the month of January of the current year, he earned a total of $8,738. FICA tax for Social Security is 6.2% on the first $118,500 of earnings each calendar year and the FICA tax for Medicare is 1.45% of all earnings. The FUTA tax rate is 0.6%, and the SUTA tax rate is 5.4%. Both unemployment taxes are applied to the first $7,000 of an employee's pay. The amount of Federal Income Tax withheld from his earnings was $1,449.87. What is the amount of the employer's payroll taxes expenses for this employee?

$378.00

$126.70

$1088.46

$42.00

$541.76

Answer 1

social security tax =$8738*6.2%=541.756

futa = $7000*0.6%=42

suta = $7000*5.4%=378

fica tax for medicare=$8738*1.45%=126.701

employer payroll tax expense =$1088.457

rounding off=$1088.46

* notes medicare taxes

1.FICA stands for federal insurance contributions act and it comprises of social security and medicare taxes which is shared between both employee and employer.

2.FUTA ( federal unemployment taxes) and SUTA ( state unemployment taxes) is paid by employer which is over and above the employee gross salary or wages.

3.federal income is paid by employees from deductions in wages or salaries and it is not to be paid by the employer.