Audrey Martin and Beth James are partners in the Country Gift Shop, which employ

Question

Audrey Martin and Beth James are partners in the Country Gift Shop, which employs the individuals listed below. Paychecks are distributed every Friday to all employees. Based on the information given, compute the amounts listed below for a weekly payroll period. OASDI Taxable Earnings OASDI Tax HI Taxable Earnings HI Tax Salary 700 per week Name and Position Zena Vertin, Office Nicole Norge, Sales Bob Mert, Delivery Audrey Martin, Partner Beth James, Partner s 485 per week 950 per week 950 per week Totals S Employer's OASDI Tax Employer's HI Tax $ la 3.2 on page 3-11

Explanation / Answer

Solution:-

* The $950 that each partner receives each week is considered a drawing (withdrawal), not a salary payment. Therefore it is not taxable by FICA at the company level. When the partners later complete their own personal tax returns, they will have to pay both the employee and the employer’s portion of FICA taxes.

**$2,980 per month x 12 months = $35,760 per year ÷ 52 weeks = $687.69 per week

Note 1:- OASDI Tax  = 6.2% of OASDI Taxable Earnings

Note 2:- HI Tax = 1.45% of HI Taxable Earnings

Please Rate or comment if you have any doubt regarding this solution.

Name and Position Salary OASDI Taxable Earnings OASDI Tax HI Taxable Earnings HI Tax Zena Vertin, Office $ 700 per week $ 700 $ 43.40 $ 700 $ 10.15 Nicole Norge, Sales 2,980 per week 687.69** 42.64 687.69 9.97 Bob Mert, Delivery 485 per week 485 30.07 485 7.03 Audrey Martin, Partner 950 per week* - - - - Beth James, Partner 950 per week* - - - - Total $ 1,872.69 $ 116.11 $ 1,872.69 $ 27.15

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