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 45 hours (45 - 40 were overtime hours) during a workweek in October of 2017. The employee earns $45/hour, with his employer paying 1.5 times the regular rate of pay for overtime hours. To date, he has earned $130,050 during the present year. He has requested that his employer withhold 8% 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 35 regular hours during a workweek in September of 2017. The employee was hired twelve years ago, earns a salary of $122,500/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 10% 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 53 hours (53 - 40 were overtime hours) during a workweek in November of 2017. The employee earns $10,100/month, with his employer paying 1.5 times the regular rate of pay for overtime hours. To date, he has earned $124,740 during the year. He has requested that his employer withhold 12% 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

Solution:

Assessable wage implies the measure of gross pay for the worker for that payroll interval.

The gross pay for a salaried representative is the measure of pay for that period. The gross pay for a hourly worker is the aggregate computed pay, increasing hours times hourly rate and including hours for additional time and the extra minutes rate.

*Taxable income for federal income tax withholding 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) Computation of Taxable income for federal income tax withholding ,Social security tax,Medicare Tax -

Taxable Income for federal income tax Withholding = (1,09,080+$1,30,050) =$2,39,130

Taxable income for Social Security Tax    =$1,09,080 ($45*40 + $45*1.5*7)*4weeks*12 months

Taxable income for Medicare Tax =$1,09,080 (2) : Computation of Taxable income for federal income tax withholding ,Social security tax,Medicare Tax - * Taxable Income for federal Income tax Withholding = $1,22,500 * Taxable income for Social security Tax = $1,22,500 *Taxable income for Medicare tax =$1,22,500 (3) : Computation of Taxable income for federal income tax withholding ,Social security tax,Medicare Tax - *Taxable income for Federal income tax Withholding = $2,45,940 [ $1,24,740 *(10,100*12)]

* Taxable income for Social Security tax = $1,27,200 *Taxable income for Medicare tax ($10,100*12) = $1,21,200