Question

Problem Information

Use the following tax rates, ceiling and maximum taxes:
Employee and Employer OASDI:	6.20%	$132,900	$8,239.80
Employee* and Employer HI:	1.45%	No limit	No maximum
Self-employed OASDI:	12.4%	$132,900	$16,479.60
Self-employed HI:	2.9%	No limit	No maximum

*Employee HI: Plus an additional 0.9% on wages over $200,000. Also applicable to self-employed.

Rounding Rules: Unless instructed otherwise compute hourly rate and overtime rates as follows:

1. Carry the hourly rate and the overtime rate to 3 decimal places and then round off to 2 decimal places (round the hourly rate to 2 decimal places before multiplying by one and one-half to determine the overtime rate).

2. If the third decimal place is 5 or more, round to the next higher cent.

3. If the third decimal place is less than 5, drop the third decimal place.

Also, use the minimum hourly wage of $7.25 in solving these problems and all that follow.

Dee is paid $2,345 on November 8, 20--. Dee had cumulative gross earnings, including overtime pay, of $131,600 prior to this pay. Round your answers to the nearest cent.

a. The amount of OASDI taxes to withhold from Dee's pay is
b. The amount of HI taxes to withhold from Dee's pay is

Answer 1

Answer :-

a) $80.60

b) $34.00

.

Explanations :-

WIth hod amount = Cieling amount - Cumulative Gross earnings

= 132,900- 131,600

= 1,300

OASDI rate = 6.2%

H.I rate = 1.45%

a.      OASDI taxes to withhold from Dee's pay = Holding amount × OASDI rate

= $1300 ×  0.062

= $80.60

.

b.     Amount of HI taxes to withhold = Amount paid by Dee × H.I rate

= $2,345 ×  0.0145

= $34.00