BMX Company has one employee. FICA Social Security taxes are 6.2% of the first $

Question

BMX Company has one employee. FICA Social Security taxes are 6.2% of the first $117,000 paid to its employee, and FICA Medicare taxes are 1.45% of gross pay. For BMX, its FUTA taxes are 0.6% and SUTA taxes are 2.9% of the first $7,000 paid to its employee. Gross Pay through August Gross Pay for September a. $ 6,400 $ 800 b. 18,200 2,100 c. 110,700 8,000 Compute BMX’s amounts for each of these four taxes as applied to the employee’s gross earnings for September under each of three separate situations (a), (b), and (c). (Round your answers to 2 decimal places.)

Explanation / Answer

Situation (a) Nature of tax Working Amount of tax($) FUTA 0.60% (7000-6400) 3.60 SUTA 2.90% (7000-6400) 17.40 FICA for Social Security 6.20% of 800 49.60 FICA for Medical Care 1.45% of 800 11.60 Situation (b) Nature of tax Working Amount of tax($) FUTA Not applicable 0 SUTA 0 FICA for Social Security 6.20% of 2100 130.20 FICA for Medical Care 1.45% of 2100 30.45 Situation (c) Nature of tax Working Amount of tax($) FUTA Not applicable 0 SUTA 0 FICA for Social Security 6.20% of 6300 390.60 FICA for Medical Care 1.45% of 8000 116.00

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