Westway Company pays Suzie Chan $2,650 per week. Assume Social Security is 6.2%

Question

Westway Company pays Suzie Chan $2,650 per week. Assume Social Security is 6.2% on $110,100 and 1.45% for Medicare.

a. By the end of week 51, how much did Westway deduct for Suzie's Social Security and Medicare for the year? (Round your answers to the nearest cent.)

What state and federal unemployment taxes does Westway pay on Suzie's yearly salary? The state unemployment rate is 5.1% and the federal unemployment tax is 0.8% on the first $7,000.

What state and federal unemployment taxes does Westway pay on Suzie's yearly salary? The state unemployment rate is 5.1% and the federal unemployment tax is 0.8% on the first $7,000.

Explanation / Answer

Solution:

(a) Suzie's gross pay (before taxes) for the 51 weeks is: $2,650 per week x 51 weeks = $135,510

Social Security = 6.2% on $135,510
Social Security = 0.062 x $135,510
Social Security = $8,401.62

Medicare = 1.45% on $135,510
Medicare = 0.0145 x $135,510
Medicare = $1,964.89

(b)

State unemployment tax = 5.1% on yearly salary

so we calculate her deduction as: $7000 x 0.051 = $357

Federal unemployment rate is 0.8%

so we calculate this as: $7000 x 0.008 = $56

Thanks :)

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