Question

   An employee works for Acme Corporation and is paid biweekly. For the most recently completed pay period, he earned $1,000 in gross pay and he has been paid $40,000 year-to-date. John has no deductions or other items increasing or decreasing his FICA taxable income. Please calculate the FICA withholding for the employee’s current paycheck.

An employee is paid $1,000 weekly. Calculate FICA taxes on the employee’s week 51 and 52 paychecks for the year.

An employee is paid $2,500 weekly. Calculate FICA taxes on the employee’s week 51 and 52 paychecks for the year.

An employee earns $65,000 from W-2 related employment and $35,000 from self-employment in 2015. Please calculate:

a.       Earnings subject to SE Tax

b.       Amount of SE Tax in total

c.       Amount of SE Tax that shows up on the first page of Form 1040

Answer 1

Q. An employee works for Acme Corporation and is paid biweekly. For the most recently completed pay period, he earned $1,000 in gross pay and he has been paid $40,000 year-to-date. John has no deductions or other items increasing or decreasing his FICA taxable income. Please calculate the FICA withholding for the employee’s current paycheck.

Calculating FICA withholding

Calculate the Social Security taxable income

Pay period = $40,000

Additional payment = $1000

Social security taxable income is $41,000

The new taxable year-to-date amount does not meet or exceed the 2020 Social Security taxable wage limit of $137,700, the entire $1000 is social security taxable income.

Calculate the Medicare taxable income

Since there is no limit on Medicare withholding, and employee’s pay is not subject to any pretax deductions, the amount of his pay subject to Medicare tax is also $1000.

Calculate the Social Security tax

Acme multiplies the 2020 employee Social Security tax rate of 6.2% by the taxable income amount of $1000. The Social Security tax to withhold is $62 ($1000 × 0.062 = $62).

Calculate the Medicare tax

The Medicare tax on employee’s $1000 paycheck is $14.5 ($1000 × 0.0145 = $14.5).

Add the Social Security and Medicare tax together

The total FICA tax amount Acme must withhold from employee’s $1000 paycheck is $76.5 ($62 + $14.5 = $76.5).

Q. An employee is paid $1,000 weekly. Calculate FICA taxes on the employee’s week 51 and 52 paychecks for the year.

Week 51 Paycheck

OASDI (Social Security Tax)

Taxable Wage Limit $137,700

Wages paid to date $1,000 x 51 = $51,000

Taxable wages this paycheck = $137,700 – $51,000 = $86,700

OASDI Tax to be Withheld = $86,700 x 6.2% (or .062) = $5,375.4

HI (Medicare Tax)

No Cap

HI Tax to be withheld = $1,000 x 1.45% (or .0145) = $14.5

Week 52 Paycheck

OASDI (Social Security Tax)

Taxable Wage Limit $137,700

Wages paid to date $1,000 x 52 = $52,000

Taxable wages this paycheck = $137,700 – $52,000 = $85,700

OASDI Tax to be Withheld = $0

HI (Medicare Tax)

No Cap

HI Tax to be withheld = $1,000 x 1.45% (or .0145) = $14.5

Q. An employee earns $65,000 from W-2 related employment and $35,000 from self-employment in 2015. Please calculate:

a.       Earnings subject to SE Tax

b.       Amount of SE Tax in total

c.       Amount of SE Tax that shows up on the first page of Form 1040

Earning subject to SE Tax = $35,000*92.35% = $32,322.5

Total amount of SE Tax = 15.3% (6.2+6.2+1.45+1.45%) = $4,239

Amount of SE Tax that shows up on the first page of Form 1040 as a adjustment of gross income.