An employee earns $5,650 per month working for an employer. The FICA tax rate fo

ID: 2486229 • Letter: A

Question

An employee earns $5,650 per month working for an employer. The FICA tax rate for Social Security is 6.2% and the FICA tax rate for Medicare is 1.45%. The current FUTA tax rate is 0.8%, and the SUTA tax rate is 5.4%. Both unemployment taxes are applied to the first $7,000 of an employee's pay. The employee has $188 in federal income taxes withheld. The employee has voluntary deductions for health insurance of $156 and contributes $78 to a retirement plan each month. What is the amount the employer should record as payroll taxes expense for the employee for the month of January?

Explanation / Answer

Social security taxes

($5,650 * 6.2%)

$ 350.30

Medicare taxes

($5,650 * 1.45%)

$ 81.93

FUTA tax

($5,650 * 0.8%)

$ 45.20

SUTA tax

($5,650 * 5.4%)

$ 305.10

Payroll tax expense

$ 782.53

Federal taxes withheld, deductions for health insurance and contributions to retirement plan are not the expense of the employers. These are the deductions from the employee’s salary on is behalf.