ATM Company has one employee. FICA Social Security taxes are 6.20% of the first

Question

ATM Company has one employee. FICA Social Security taxes are 6.20% of the first $106,800 paid to its employee, and FICA Medicare taxes are 1.45% of gross pay. For ATM, its FUTA taxes are 0.80% and SUTA taxes are 2.90% of the first $7,000 paid to its employee.

Compute ATM’s amounts for each of the above four taxes as applied to the employee’s gross earnings for September under situation (a). (Round your answers to 2 decimal places. Omit the "$" sign in your response)

Compute ATM’s amounts for each of the above four taxes as applied to the employee’s gross earnings for September under situation (b). (Leave no cells blank - be certain to enter "0" wherever required. Round your answers to 2 decimal places. Omit the "$" sign in your response)

ATM Company has one employee. FICA Social Security taxes are 6.20% of the first $106,800 paid to its employee, and FICA Medicare taxes are 1.45% of gross pay. For ATM, its FUTA taxes are 0.80% and SUTA taxes are 2.90% of the first $7,000 paid to its employee.

Explanation / Answer

Solution:

FICA—Social Security

$  3,200*0.062 = $198.40

FICA - Medicare

$ 3,200*0.0145 = $46.4

FUTA

*$2,000*0.008 = $16

SUTA

$2000*0.029 = $58

*$7,000 - $5,000 = $2,000

b.

FICA—Social Security

$  3,000*0.062 = $198.40

FICA - Medicare

$ 3,000*0.0145 = $46.4

FUTA

*$0

SUTA

$0

* As it’s paid only on first 7000 and gross pay till August exceed 7000

FICA—Social Security

$  3,200*0.062 = $198.40

FICA - Medicare

$ 3,200*0.0145 = $46.4

FUTA

*$2,000*0.008 = $16

SUTA

$2000*0.029 = $58

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