Paloma Co. Stars has four employees. : Paloma Co Stars has four employees FICA S

Question

Paloma Co. Stars has four employees. : Paloma Co Stars has four employees FICA Social Security taxes are 6.2% of the first S1 17,000 paid to each employee, and FICA Medicare taxes are 1.45% of gross pay Also, for the first $7,000 paid to each employee, the company's FUTA taxes are 6% and SUTA taxes are 620% The company is preparing its payroll calculations for the week ended August 25. Payroll records show the following information for the company's four employees Current Week Income Tax Withholding Gross Pay Name through Aug 18 Gross Pay Dahlia $116,000 Trey $2,050 800 460 410 $ 291 129 40 31 116,200 Kiesha Chee 7,200 1,150 In addition to gross pay, the company must pay one-half of the $62 per employee weekly health insurance each employee pays the remaining one-half The company also contributes an extra 8% of each employee's gross pay (at no cost to employees) to a pension fund Required: Compute the following for the week ended August 25. (Round your intermediate calculations and final answers to 2 decimal places.): 1) Employees' FICA Withholdings for Social Security Earnings Subject to Tax Tax Rate Tax Amount Employee 620% Dahlia Trey Kiesha Chee Total 0.00 Employees' FICA Withholdings for Medicare mployee Dahlia Trey KGesha Chee Earnings Subject to Tax Tax Rate Tax Amount Total 3) Employer's FICA Taxes for Social Security Employee Dahlia Earnings Subject to Tax Tax Rate Tax Amount Type here to search

Explanation / Answer

Solution: 1. Employees' FICA Withholdings for Social Security Employee Earnings subject to tax Tax Rate Tax Amount Dahlia $1,000.00 6.20% $62.00 Trey $800.00 6.20% $49.60 Kiesha $460.00 6.20% $28.52 Chee $410.00 6.20% $25.42 Total $165.54 Working Notes: Each employee’s FICA withholdings for Social Security Dahlia Trey Kiesha Chee Total Maximum base $117,000 $117,000 $117,000 $117,000 Less: Earned through 8/18 $116,000 $116,200 7,200 1,150 Amount Subject to tax (a) $1,000 $800 $109,800 $115,850 Earned this week (b) $2,050 800 460 410 Subject to tax ( a or b which ever is lower) $1,000 $800 460 410 Tax rate 6.20% 6.20% 6.20% 6.20% Social Security Tax 62.00 49.6 28.52 25.42 165.54 2. Employees' FICA Withholdings for Medicare Employee Earnings subject to tax Tax Rate Tax Amount Dahlia $2,050 1.45% $29.73 Trey $800 1.45% $11.60 Kiesha $460 1.45% $6.67 Chee $410 1.45% $5.95 Total $53.94 Working Notes: Each employee’s FICA withholdings for Medicare Dahlia Trey Kiesha Chee Total Earned this week $2,050 $800 $460 $410 Tax rate 1.45% 1.45% 1.45% 1.45% Medicare tax $29.73 $11.60 $6.67 $5.95 $53.94 3. Employers' FICA Withholdings for Social Security Employee Earnings subject to tax Tax Rate Tax Amount Dahlia $1,000.00 6.20% $62.00 Trey $800.00 6.20% $49.60 Kiesha $460.00 6.20% $28.52 Chee $410.00 6.20% $25.42 Total $165.54 Working Notes: Employer’s FICA withholdings for Social Security Dahlia Trey Kiesha Chee Total Maximum base $117,000 $117,000 $117,000 $117,000 Less: Earned through 8/18 $116,000 $116,200 7,200 1,150 Amount Subject to tax (a) $1,000 $800 $109,800 $115,850 Earned this week (b) $2,050 800 460 410 Subject to tax ( a or b which ever is lower) $1,000 $800 460 410 Tax rate 6.20% 6.20% 6.20% 6.20% Social Security Tax 62.00 49.6 28.52 25.42 165.54 4. Employers' FICA Withholdings for Medicare Employee Earnings subject to tax Tax Rate Tax Amount Dahlia $2,050 1.45% $29.73 Trey $800 1.45% $11.60 Kiesha $460 1.45% $6.67 Chee $410 1.45% $5.95 Total $53.94 Working Notes: Each employee’s FICA withholdings for Medicare Dahlia Trey Kiesha Chee Total Earned this week $2,050 $800 $460 $410 Tax rate 1.45% 1.45% 1.45% 1.45% Medicare tax $29.73 $11.60 $6.67 $5.95 $53.94 5. Employers' FUTA Taxes Employee Earnings subject to tax Tax Rate Tax Amount Dahlia $0 0.60% Trey $0 0.60% Kiesha $0 0.60% Chee $410 0.60% $2.46 Total $2.46 Working Notes: Employer's FUTA taxes Dahlia Trey Kiesha Chee Total Maximum base $7,000 $7,000 $7,000 $7,000 Earned through 8/18 $116,000 $116,200 7,200 1,150 Amount Subject to tax (a) $0 $0 $0 $5,850 Earned this week (b) $2,050 800 460 410 Subject to tax ( a or b which ever is lower) $0 $0 0 410 Tax rate 0.60% 0.60% 0.60% 0.60% FUTA tax 0.00 0 0 2.46 2.46 6. Employers' SUTA Taxes Employee Earnings subject to tax Tax Rate Tax Amount Dahlia $0 6.20% Trey $0 6.20% Kiesha $0 6.20% Chee $410 6.20% $25.42 Working Notes: Employer's SUTA taxes Dahlia Trey Kiesha Chee Total Maximum base $7,000 $7,000 $7,000 $7,000 Earned through 8/18 $116,000 $116,200 7,200 1,150 Amount Subject to tax (a) $5,850 Earned this week (b) $2,050 800 460 410 Subject to tax ( a or b which ever is lower) $0 $0 0 410 Tax rate 6.20% 6.20% 6.20% 6.20% SUTA tax 0.00 0 0 25.42 25.42 7. Each employee's net (take-home) pay. Employee Dahlia Trey Kiesha Chee Total Gross pay $2,050 800 460 410 $3,720 Income tax withholding $291 129 40 31 $491 FICA-Social Security 62 49.6 28.52 25.42 165.54 FICA-Medicare 29.73 11.6 6.67 5.95 53.94 Health Insurance 31 31 31 31 $124 Net Pay $1,636.28 $578.80 $353.81 $316.64 $2,885.52 Working Notes: Each employee's net (take-home) pay. Employee Dahlia Trey Kiesha Chee Total Gross pay $2,050 800 460 410 $3,720 Less: Income tax withholding $291 129 40 31 $491 Less: FICA-Social Security 62 49.6 28.52 25.42 165.54 Less: FICA-Medicare 29.73 11.6 6.67 5.95 53.94 Less: Health Insurance 31 31 31 31 $124 Take home pay $1,636.28 $578.80 $353.81 $316.64 $2,885.52 8. Total payroll-related expense for each employee. Employee Dahlia Trey Kiesha Chee Total Gross pay $2,050 800 460 410 $3,720 FICA-Social Security 62 49.6 28.52 25.42 165.54 FICA-Medicare 29.73 11.6 6.67 5.95 53.94 FUTA 0 0 0 2.46 2.46 SUTA 0 0 0 25.42 25.42 Health Insurance 31 31 31 31 $124 Pension 164.00 64.00 36.80 32.80 297.60 Total Payroll Expense $2,337 $956 $563 $533 $4,389 Working Notes: Employer's total payroll-related expense for each employee. Employee Dahlia Trey Kiesha Chee Total Gross pay $2,050 800 460 410 $3,720 Add: FICA-Social Security 62 49.6 28.52 25.42 165.54 Add: FICA-Medicare 29.73 11.6 6.67 5.95 53.94 Add: FUTA 0 0 0 2.46 2.46 Add: SUTA 0 0 0 25.42 25.42 Add: Health Insurance 31 31 31 31 $124 Add: Pension (8% of Gross pay) 164.00 64.00 36.80 32.80 297.60 Total Payroll Expense $2,337 $956 $563 $533 $4,389 Please feel free to ask if anything about above solution in comment section of the question.

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