Jerry Little\'s gross wages as of October 31 were $110,000. He earned gross wage

Question

Jerry Little's gross wages as of October 31 were $110,000. He earned gross wages of $4,000 for the pay period ended November 15, 2016. Deducted from his paycheck this period, were federal income taxes of $400, state income taxes of $150, social security of 6.2% on the first $113,700 and Medicare tax of 1.45%. State Unemployment Tax is 4%, and Federal Unemployment tax is .6% on the first $7,000 of annual earnings. Calculate the employer payroll income taxes associated with Jerry's November 15 paycheck.

A. $1,048.00

B. $498.00

C. $306.00

D. $287.40

Explanation / Answer

Ans (D) OASDI(Social security) HI (Medicare) Employee's earning subject to tax in one year $                     113,700.00 No Max Employees earning prior to this month $                     110,000.00 Current pay subject to OASDI portion of FICA tax $                          3,700.00 $       4,000.00 FICA tax rate 0.062 0.0145 FICA tax to be withheld from the current Paycheck $                             229.40 $             58.00 Total OASDI & HI Tax $                             287.40 FICA Tax: The Federal Insurance contribution act (FICA) ,also known as Social Security Act, created the social security tax.The social security Program provides retirement,disability and medical benefits.The law requires the employers to withhold Social Security(FICA) tax from employee's pay check. The FICA tax has two components: 1 Old age,survivors and disability insurance 2 Health Insurance (Medicare) In addition to Income tax and FICA tax,which are withheld from employee Pay checks, employer must payat least three payroll taxes.These taxes do not come out of employees Paychecks. 1 Employer FICA tax 2 State Unemployment Compensation tax 3 Federal Unemployment compensation tax

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