Question

Paloma Co. has four employees. FICA Social Security taxes are 6.2% of the first $128,400 paid to each employee, and FICA Medicare taxes are 1.45% of gross pay. Also, for the first $7,000 paid to each employee, the company’s FUTA taxes are 0.6% and SUTA taxes are 5.4%. The company is preparing its payroll calculations for the week ended August 25. Payroll records show the following information for the company’s four employees.

						Current Week
Name	Gross Pay through Aug. 18					Gross Pay					Income Tax Withholding
Dali		$	124,000				$	4,900				$	582
Trey			125,600					2,800					290
Kiesha			9,200					1,800					57
Chee			3,150					1,600					46

In addition to gross pay, the company must pay one-half of the $102 per employee weekly health insurance; each employee pays the remaining one-half. The company also contributes an extra 8% of each employee’s gross pay (at no cost to employees) to a pension fund.

1. Each employee's FICA withholdings for Social Security.

2. Each employee's FICA withholdings for Medicare.

3. Employer's FICA taxes for Social Security.

4. Employer's FICA taxes for Medicare.

5. Employer's FUTA taxes.

6. Employer's SUTA taxes.

7. Each employee's net (take-home) pay.

8. Employer's total payroll-related expense for each employee.

Answer 1

Part 1

Employee	Earnings Subject to Tax	Tax Rate	Tax Amount
Dali	4400	6.20%	272.80
Trey	2800	6.20%	173.60
Kiesha	1800	6.20%	111.60
Chee	1600	6.20%	99.20
		Total	$657.20

128400-124000 = 4400

Part 2

Employee	Earnings Subject to Tax	Tax Rate	Tax Amount
Dali	4900	1.45%	71.05
Trey	2800	1.45%	40.60
Kiesha	1800	1.45%	26.10
Chee	1600	1.45%	23.20
		Total	$160.95

Part 3

Employee	Earnings Subject to Tax	Tax Rate	Tax Amount
Dali	4400	6.20%	272.80
Trey	2800	6.20%	173.60
Kiesha	1800	6.20%	111.60
Chee	1600	6.20%	99.20
		Total	$657.20

Part 4

Employee	Earnings Subject to Tax	Tax Rate	Tax Amount
Dali	4900	1.45%	71.05
Trey	2800	1.45%	40.60
Kiesha	1800	1.45%	26.10
Chee	1600	1.45%	23.20
		Total	$160.95

Part 5

Employee	Earnings Subject to Tax	Tax Rate	Tax Amount
Dali		0.60%
Trey		0.60%
Kiesha		0.60%
Chee	1600	0.60%	9.60
		Total	$9.60

Part 6

Employee	Earnings Subject to Tax	Tax Rate	Tax Amount
Dahlia		5.40%
Trey		5.40%
Kiesha		5.40%
Chee	1600	5.40%	86.40
		Total	$86.40

Part 7

Employee	Dahlia	Trey	Kiesha	Chee	Total
Gross Pay	4900.00	2800.00	1800.00	1600.00	11100.00
Income tax withholding	582.00	290.00	57.00	46.00	975.00
FICA - Social Security	272.80	173.60	111.60	99.20	657.20
FICA - Medicare	71.05	40.60	26.10	23.20	160.95
Health Insurance	51.00	51.00	51.00	51.00	204.00
Net Pay	3923.15	2244.80	1554.30	1380.60	9102.85

Part 8

Employee	Dahlia	Trey	Kiesha	Chee	Total
Gross Pay	4900.00	2800.00	1800.00	1600.00	11100.00
FICA - Social Security	272.80	173.60	111.60	99.20	657.20
FICA - Medicare	71.05	40.60	26.10	23.20	160.95
FUTA	0	0	0	9.60	9.60
SUTA	0	0	0	86.40	86.40
Health Insurance	51.00	51.00	51.00	51.00	204.00
Pension (gross pay * 8%)	392.00	224.00	144.00	128.00	888.00
Total Payroll Expense	5686.85	3289.2	2132.7	1997.4	13106.15