Question

Single Priscilla earns $20,000 per month. Compute her annual gross earnings, withholdings, and net earnings. Note that her contribution to FICA--MC increased by 0.9% because she earns over $200,000 a year (1.45% up to $200,000; 2.35% on $200,000.01 and more). Priscilla's payroll summary 1 6 .2% 1.45% +0.9% 25% 5% $100/month $75/month Gross Earnings FICA-SS FICA-MC Federal income tax State income tax Health insurance ADRA contribution. Net Earnings formula 20,000x12 127,20 x .062240, 0 , 0235 240, US*.25 240,DORES 100 x 12 75 x 12 IGE- willsiden 152,373.60 $$ 240,00 7886.40 5,640 60,000 12oow Compute the employer's taxes on Priscilla's payroll. first 7,000 first 7000 0.06% 3.5% $100/month FICA-SS FICA-MC FUTA SUTA Health insurance formula* 12,238*.362 240,00ox. 7000 x.voor 70007.035 Total Taxes for oferte the left Todox I 4. 20 245 1200 12,815.60 $$ 7886.4. 3460 *may be cell location (in place of formula)

Please explain where these numbers are coming from and the computations to arrive at these numbers, thanks

Answer 1

Priscilla's Payroll Summary

Category	Explanation	Formula	Amount
Gross Earnings	Given in the question: $20,000 per month earnings	$20,000 per month x 12 months	$2,40,000.00
FICA - SS	For upto an earnings of $127,200, 6.2% is made as contribution to the government for supporting older Americans	$127,200 x 6.2%	$7,886.40
FICA - MC	Additional contribution made to the government for Medicare benefits	$240,000 (Gross Earnings) x (1.45% + 0.9%)	$5,640.00
Federal Income Tax	25% Tax on Gross Earnings	$240,000 x 25%	$60,000.00
State Income Tax	5% Tax on Gross Earnings	$240,000 x 5%	$12,000.00
Health Insurance	$100 per month	$100 per month x 12 months	$1,200.00
ADRA Contribution	$75 per month as donation	$75 per month x 12 months	$900.00
Net Earnings	Gross Earnings minus all deductions	$240,000 - ($7,886.40 + $5,640.00 + $60,000 + $12,000 + $1,200 + $900)	$1,52,373.60

Employer's Taxes on Priscilla's Payroll:

Category	Explanation	Formula	Amount
FICA - SS	Equal contribution made by employer as that of employee	$127,200 x 6.2%	$7,886.40
FICA - MC	Contribution made by employer to the maximum of 1.45%	$240,000 (Gross Earnings) x 1.45%	$3,480.00
FUTA - 6.0%	Federal Unemployment Tax by employer is 0.06% on the first $7,000 paid to employee	$7,000 x 6%	$4.20
SUTA - 3.5%	State Unemployment Tax by employer is 3.5% on the first $7,000 paid to employee	$7,000 x 3.5%	$245.00
Health Insurance	$100 per month - equal contribution by employer	$100 per month x 12 months	$1,200.00
TOTAL TAXES	Sum of all the above	$7,886.40 + $3,480.00 + $4.20 + $245.00 + $1,200.00	$12,815.60