Question

An employee receives an hourly rate of $20.00, with time and a half for all hours worked in excess of 40 during the week. payroll data for the first week of the calendar year are as follows: hours worked, 48.00 federal income tax withheld, $130.00; social security tax rate, 6% on maximum of $100,000; and medicare tax rate, 1.5% on all earnings; state unemployment compensation tax, 3.4% on the first $7,000; federal unemployment compensation tax, .8% on the first $7,000. what is the net amount to be paid the employee? if required, round your answers to the nearest cent. select the correct answer.

Answer 1

First calculate the gross wage earned, accounting for the 8 hours of overtime at $30/hr. 40*$20 + 8*$30 = $1040. With this being the first pay of the calendar year, the worker is not hitting the 7,000 or 100,000 thresholds where taxes would not apply. We can therefore add all the tax rates together, 6+1.5+3.4+.8 = 11.7. So we multiple this by the earnings to find the sum of these taxes, 0.117 * $1040 = $121.68. Adding the flat rate for federal income tax gives the total tax withheld, $130 + $121.68 = $251.68. Subtracting this value from earnings gives the amount paid to the employee. $1040 - $251.68 = $788.32