Question

Figure the employer's taxes/benefits on the December 23 payroll, remembering that some taxes have caps (maximum employee earnings to be taxed). Journalize the entry. Grant Oil Company Employer's Taxes on the Payroll For the Week Ending December 23 Taxes 0.6% 3.4% FICA FICA Federal State SS Medicare Total YTD Hours Hourly Gross Unemployment Unemployment Tax Retirement Employer Employee Earnings Worked Pay Rate Pay Tax - Тах 6.2% 1.45% Fund Taxes Hiliard $ 127,100 44 salary $ 2,500.00 0 6 .20 36.25 ls 250 Renard s 6,550 415 105 415.00 2.49 14.11 | 25.73 25.73 6.02 IS 15.00 63.35 Yount $ 36,785 40 $ 18$ 720.000 44.641 10.414 S 25.00 80.08 Totals I x x x S 3,635.00 2.49 14.11 76.57 52.71 Is 85.00 230.86 1

please explain where the hand written numbers came from and the computations done to arrive at those numbers

Answer 1

As per IRS, Federal and state unemployment taxes are calculated on first $7000 of employees' wages in the current year.

According to this,

Federal and state unemployment tax for Hilliard and Yount will be zero for week ending December 23 because both taxes are calculated on first $7000 of their annual income and anything above $7000 will not be taxed, i.e the tax will be calculated till their YTD earning have not crossed $7000, After their YTD Earnings have crossed $7000 rheir will be no further deductions.

Similarly, for Renard, his YTD earnings are yet to cross $7000 so the gross pay for the week will have deductions i.e 0.006*$415=$2.49

For FICA Taxes,

All the employees have standard deductions i.e Rate* Gross Pay for the week except Hilliard for FICA SS tax because of the caps. The maximum annual wage on which the tax will be calculated was $127200 and YTD Earnings of Hilliard are $127100, so the FICA SS tax will be calculated on next $100 only not beyond that so FICA SS tax for Hilliard will be 0.062*$100=$6.2