Question

For each employee, first calculate gross pay. Then determine taxable income used to calculate federal income tax withholding, Social Security tax, and Medicare tax.

NOTE: For simplicity, all calculations throughout this exercise, both intermediate and final, should be rounded to two decimal places at each calculation.

1:An employee works 47 hours (47 - 40 were overtime hours) during a workweek in December of 2017. He earns $39/hour, with his employer paying 1.5 times the regular rate of pay for overtime hours. To date, he has earned $125,350 during the year. He has requested that his employer withhold 6% of gross pay, which is to be contributed to a 401(k) plan.

Taxable income for federal income tax withholding = $
Taxable income for social security tax = $
Taxable income for medicare tax = $

2:An employee works 38 regular hours during a workweek in August of 2017. He was hired six years ago, earns a salary of $116,400/year, and is exempt from the overtime provisions of the FLSA. To date, he has received no compensation beyond his annual salary. He has requested that his employer withhold 11% of gross pay, which is to be contributed to a 403(b) plan.

Taxable income for federal income tax withholding = $
Taxable income for social security tax = $
Taxable income for medicare tax = $

3:An employee works 54 hours (54 - 40 were overtime hours) during a workweek in December of 2017. He earns $13,000/month, with his employer paying 1.5 times the regular rate of pay for overtime hours. To date, he has earned $128,800 during the year. He has requested that his employer withhold 7% of gross pay, which is to be contributed to a 401(k) plan.

Taxable income for federal income tax withholding = $
Taxable income for social security tax = $
Taxable income for medicare tax = $

Answer 1

Taxable income means the amount of gross pay for the employee for that pay period.

The gross pay for a salaried employee is the amount of salary for that period. The gross pay for an hourly employee is the total calculated pay, multiplying hours tomes houurly rate and including hours for overtime & the overtime rate.

'Taxable income for federal income tax witholding' means the gross pay for the employee.

'Taxable income for social security tax' means Lower of Gross wages or $127,200

'Taxable income for medicare tax' means the gross pay for the employee.

1. Statement showing the calculations

Particulars	$
Taxable income for federal income tax witholding (86112+125,350)	211,462
Taxable income for social security tax (39*40 + 39*1.5*7)*4 weeks*12 months	86,112
Taxable income for medicare tax	86,112

2. Statement showing the calculations

Particulars	$
Taxable income for federal income tax witholding	116,400
Taxable income for social security tax	116,400
Taxable income for medicare tax	116,400

3. Statement showing the calculations

Particulars	$
Taxable income for federal income tax witholding (128,800 + 13,000*12)	284,800
Taxable income for social security tax	127,200
Taxable income for medicare tax (13,000*12)	156,000