Question

Note: In this chapter and in all succeeding work throughout the course, unless instructed otherwise, use the following rates, ceiling, and maximum taxes. $128,400 $7,960.80 6.20% Employee and Employer OASDI: No limit No maximum 1.45% Employee" and Employer HI: $15,921.60 $128,400 12.4% Self-employed OASDI: 2.9% No limit No maximum Self-employed HI: 1. Carry the hourly rate and the overtime rate to 3 decimal places and then round off to 2 decimal places (round the hourly rate to 2 decimal places before multiplying by one and one-half tojdetermine the over- time rate). 2. If the third decimal place is 5 or more, round to the next higher cent. 3. If the third decimal place is less than 5, simply drop the third decimal place. Examples: Monthly rate $1,827 Weekly rate ($1,827 x 12)/52 - $421.615 rounded to $421.62 Hourly rate $421.62/40 - $10.540 rounded to $10.54 O.T. rate $10.54 x 1.5 - $15.81 Also, use the minimum hourly wage of $7.25 in solving these problems and all that follow. "Employee HI: Plus an additional 0.9% on wages over $200,000. Also applicable to self-employed. Example 3-1 Ernie Gilmore began working as a part-time waiter on June 1, 2019, at Sporthouse Restaurant. The cash tips of $390 that he received during June were reported on Form 4070, which he submitted to his employer on July 3. During July, he was paid wages of $525 by the restaurant. Compute the following amounts. Round your answers to the nearest cent. OASDI HI a. The amount of FICA taxes that the employer should withhold from Gilmore's wages during July. b. The amount of the employer's FICA taxes on Gilmore's wages and tips during July.

Answer 1

Solution Given data. but could a) FICA taxes on Employee wages 13:26 in $. O A SDI HT 56.73 (525+390) x6,2% (525+390 X 10454. 915x6-2% al58145% 56-73 13.26 b) FICA taxes by employer Note the July wages will be counted as $525 plus the gune tips $390 which was de pooted in July be Employec If any doubt please comment