1. Janella Robinson has a new job at the Port of Tacoma. Her new annual salary w
ID: 3146845 • Letter: 1
Question
1. Janella Robinson has a new job at the Port of Tacoma. Her new annual salary will be $75,500. For home budgeting purposes she wants to know what her gross pay will be for each pay check but she forgot to ask whether she will be paid biweekly or semi-monthly. What will Ms. Robinson's gross pay per pay period be if she is paid biweekly? semi-monthly?
2. Janella Robinson, from question 1, emailed the payroll accountant at the Port and found out that she will be paid semi-monthly. What will be her FICA deductions (social security and medicare) for each payroll period? Will she ever be non-taxable for Social Security? Why or why not? Will she ever pay the higher rate for Medicare? Why or why not?
Explanation / Answer
1) Annual Salary = $75,500
There are total of 52 weeks in a year, so if she is paid bi-weekly, she will get total of 52/2 = 26 salaries
Amount of Money received if she is paid biweekly = $75,500/26 = $2903.84
There are total of 12 months in a year, so if she is paid semi-monthly, she will get total of 12 * 2 = 24 salaries
Amount of Money received if she is paid semi-monthly = $75,500/24 = $3145.83
2)
Siince her salary will be paid sem-monthly, the amount received at each payment period = $3145.83
FICA deductions are 7.65% of the total salary from employee and employer side, so total deductions will be 15.3% per year
FICA Deductions = 7.65/100 * 3145.83 = $240.655
Social security deductions = 6.2/7.65 * 240.655 = $195.04
Medicare deductions = 1.45/7.65 * 240.655 = $45.614
Since, she is company regular employee she has too pay the social taxes depending upon the salary which is not capped. For business man and private owners, there is no concept of payment of social taxes
Medicare are not capped and they will increase with the increase in salary
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