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 $118,500 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.

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). Please show solutions.

Gross Pay for Gross Pay through August $ 6,400 September $ 800 2,100 8,000 b. 18,200 C. 112,200

Explanation / Answer

Situation A

Situation B

Situation C

Tax September Earnings Subject to Tax Tax Rate Tax Amount FICA- Social Security $800 6.20% $49.60 FICA - Medicare $800 1.45% $11.60 FUTA ($7,000 - $6,400) $600 0.60% $3.60 SUTA ($7,000 - $6,400) $600 2.90% $17.40 $82.20

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