Question

5. Ulanda U. Lucky is an air traffic controller who is paid $14,000 per month. Use the FICA rate is 6.2% on the first $127,200 of earnings and the Medicare tax rate is 1.45% on all earnings.

1. How much FICA tax should be withheld from Ms. Lucky’s paycheck for the month of March?

                                                                                                                        ________________________

2. How much Medicare tax should be withheld from Ms. Lucky’s paycheck for the month of March?

                                                                                                                        ________________________

3. How much FICA tax should be withheld from Ms. Lucky’s paycheck for the month of October?

                        ________________________

4. How much Medicare tax should be withheld from Ms. Lucky’s paycheck for the month of October?

                                                                                                                        ________________________

For Questions 12 – 13, find the FICA and Medicare tax for each of the following self-employed people. Assume that none of them has earned over $127,200 for the year. Use a FICA rate of 12.4% and a Medicare rate of 2.9%.

                                                           

6. Lois Steem is a self-employed assertiveness training coach. Her adjusted income is $19,500 for the first quarter.

1. FICA tax        ________________________

2. Medicare tax ________________________

7. The employees of the Hadley-Newham Funeral Home paid a total of $678.15 in Social Security tax, $158.60 in Medicare, and $21858 in federal withholding. Find the total amount the company should send the IRS.

Answer 1

According to IRS (Internal Revenue System ), The employess deductions comprises of as follows by the employer

FICA (Federal Insurance Contributions Act) :

1) Social Security or OASDI(Old Age, Survivors and Disability Insurance) - 6.2% on first $ 127,200

2) Medicare - 1.45% on All earnings

Given, Ulanda U. Lucky ,an air traffic controller is paid $14,000 per month.

It is assumed the fiscal year is from March to April

How much FICA tax should be withheld from Ms. Lucky’s paycheck for the month of March?

FICA TAX - 6.2% is calculated on first $ 127,200, It is assumed the fiscal year is from March to April . The earnings for march 14000 is less than 127200 and eligible for tax.

FICA TAX = 14000 * 6.2% = 868

So, FICA TAX to be withheld from Ms. Lucky’s paycheck for the month of March is $ 868

How much Medicare tax should be withheld from Ms. Lucky’s paycheck for the month of March?

Medicare taxes is paid on all earnings.

Medicare = 14000 * 1.45% = 203

Medicare tax to be withheld from Ms. Lucky’s paycheck for the month of March is $ 203

How much FICA tax should be withheld from Ms. Lucky’s paycheck for the month of October ?

Since it is assumed the fiscal year is from March to April, total earnings till october will be 14000* 8 = 112,000 which is less than 127200 and hence FICA for the month of October is taxable.

FICA TAX = 14000 * 6.2% = 868

So, FICA TAX to be withheld from Ms. Lucky’s paycheck for the month of October is $ 868

How much Medicare tax should be withheld from Ms. Lucky’s paycheck for the month of October?

Medicare taxes is paid on all earnings.

Medicare = 14000 * 1.45% = 203

Medicare tax to be withheld from Ms. Lucky’s paycheck for the month of October is $ 203

As per FICA, If you are a Sef employed you are liable to pay Social Security and Mediacre taxes both as an employer and employee,since you dont have an employer.

Given, Lois Steem a self-employed assertiveness training coach adjusted income is $19,500 for the first quarter and assumed he didi not earned more tahn 127,200

a) FICA TAX : As Lois steem is self employes, she is liable to pay the tax @ of 12.4%. Her adjusted income is $19,500 for the first quarter which is less than 127,200 and hence the taxable income is 19500

FICA Taxes = Taxable Income* 12.4%

= 19500 * 12.4%

FICA TAXES = $ 2418

Total FICA Taxes payable for the quarter is $ 2418

b) Medicare Taxes are taxable on all earnings @ of 2.9% for self employed so taxable income is 19500

Medicare Tax = Total Earnings * 2.9%

= 19500 * 2.9%

Medicare Tax = $ 565.5

Total Medicare taxes payable for the quarter is $ 565.5

Medicare Tax = $ 565.5

The employees of the Hadley-Newham Funeral Home paid a total of $678.15 in Social Security tax, $158.60 in Medicare, and $21858 in federal withholding. Find the total amount the company should send the IRS.

Hadley-Newham Funeral Home has the following witholdings from his employees

Social Security (6.2%) - 678

Medicare (1.45%) - 158.60

Total FICA = 836.6

Federal Holding - 21,858

Total Witholding = 22694

The employer and the employee has to pay the equal portion of amount towards FICA taxes

Employees witheld FICA Taxes = 836.6

Employer need to pay same amount of FICA Taxes = 836.6

Federal Holding = 21858

Total amount company should send to IRS = 23531.2

NOTE: The details are not given for the calculation of FUTA and SUTA for employer