8.) On March 31, Mr. R quit his job with MT Inc. and began a new job with PK Com

Question

8.) On March 31, Mr. R quit his job with MT Inc. and began a new job with PK Company. His salary from MT Inc. was $53,900 and his salary from PK Company was $70,000. Compute his excess payroll tax withholding credit.(Assume a social security rate of 6.2% and a wage base limit of $118,500.)

9.) Mr. and Mrs. K’s AGI was $14,000. Their federal income tax withholding was $850. They had no itemized deductions and two dependent children, ages 15 and 16. If they are entitled to a $5,460 earned income credit, compute their tax refund. (Ignore any possible refundable child tax credit.)

Explanation / Answer

ANSWER 8

TAX ON 53900 => 53900*3.1% => 1671

TAX ON 70000 => 70000*3.1% => 2170

EXCESS PAYROLL TAX WITHOUT CREDIT IS 2170- 1671 =>$ 499

NOTE: BALANCE TAX OF 3.1% WILL BE PAID BY EMPLOYER

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