Question

An employee earned $4,600 in february working for an employer. cumulative earnings of the previous pay periods are $4,800. the fica tax rate for social security is 6.2% of the first $118,500 of earnings each calendar year and the fica tax rate for medicare is 1.45% of all earnings. the current futa tax rate is 0.6%, and the suta tax rate is 5.4%. both unemployment taxes are applied to the first $7,000 of an employee's pay. what is the amount the employer should record as payroll taxes expense for the month of february?

Answer 1

Answer: The total payroll tax expense is $483.90.

Explanation: The total of the payroll tax expense is the amount that the employer will record for the month.

Social Security - will pay on entire amount - $4,600 x .062 = $285.20

Medicare - will pay on entire amount - $4,600 x .0145 = $66.70

The following two taxes are only paid on the first $7,000 paid each year. It was paid on $4,800 in the previous pay period, so will only need to be paid on $2,200 this pay period in order to reach the $7,000 threshold. ($7,000 - 4,800 = 2,200)

FUTA - $2,200 x .006 = $13.20

SUTA - $2,200 x .054 = $118.80

The total amount of payroll tax expense is $285.20 + 66.70 + 13.20 + 118.80 = $483.90