Note: In this chapter and in all succeeding work throughout the course, unless instructed otherwise, use the following rates, ceiling, and maximum taxes.
| Employee and Employer OASDI: |
6.20% |
$118,500 |
$7,347 |
| Employee* and Employer HI: |
1.45% |
No limit |
No maximum |
| Self-employed OASDI: |
12.4% |
$118,500 |
$14,694 |
| Self-employed HI: |
2.9% |
No limit |
No maximum |
| 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 to determine 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 × 12)/52 = $421.615 rounded to $421.62
Hourly rate $421.62/40 = $10.540 rounded to $10.54
O.T. rate $10.54 × 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
The biweekly taxable wages for the employees of Rite-Shop follow. Compute the FICA taxes for each employee and the employer's FICA taxes.
If required, round your answers to nearest cent and use the rounded answers in subsequent computations. Round your final answers to the nearest cent.
|
|
|
|
|
FICA Taxes
|
| Employee No. |
Employee Name |
Biweekly Taxable Wages |
OASDI |
HI |
| 711 |
Castro, Manny |
|
$1,000.00 |
|
$ |
$ |
| 512 |
Corrales, Pat |
|
968.00 |
|
|
|
| 624 |
Guitar, Joseph |
|
1,004.00 |
|
|
|
| 325 |
Moore, Connie |
|
1,046.40 |
|
|
|
| 422 |
Morrison, Harry |
|
1,200.00 |
|
|
|
| 210 |
Robertson, Catherine |
|
1,044.80 |
|
|
|
| 111 |
Swarez, Joseph |
|
1,122.00 |
|
|
|
|
Totals |
|
$ |
|
$ |
$ |
| Employer's OASDI |
$ |
|
$ |
|
Total Taxable Wages |
|
Employer's OASDI Tax |
| Employer's HI Tax |
$ |
|
$ |
|
Total Taxable Wages |
|
Employer's HI Tax |