Question

An employee receives an hourly rate of $45, with time and a half for all hours worked in excess of 40 during the week. Payroll data for the current week are as follows: hours worked, 48; federal income tax withheld, $950; social security tax rate, 6.0%; Medicare tax rate, 1.5%; state unemployment compensation tax, 3.4% on the first $7,000; federal unemployment compensation tax, 0.8% on the first $7,000. 

Calculate the employer's payroll tax expense if: 

(a) This is the first payroll of the year and the employee has no cumulative earnings for the year to date. 

(b) The employee's cumulative earnings for the year prior to this week equal $6.200. 

(c) The employee's cumulative earnings for the year prior to this week equal $118,700,

Answer 1

Gross earnings:
		Amount $
Normal	40 *45	1800
Overtime	8*45*1.5	540
Gross earnings		2340
(a) Employer's payroll tax expense:
		Amount $
social security tax	2340*6%	140.4
medicare tax	2340*1.5%	35.1
SUTA	2340*3.4%	79.56
FUTA	2340*0.8%	18.72
Employer's Payroll Tax Expense:		273.78
(b) Employer's payroll tax expense:
		Amount $
social security tax	2340*6%	140.4
medicare tax	2340*1.5%	35.1
SUTA, being (7000-6200)<2340	(7000-6200)*3.4%	27.2
FUTA, being (7000-6200)<2340	(7000-6200)*0.8%	6.4
Employer's Payroll Tax Expense:		209.1
(c) Employer's payroll tax expense:
		Amount $
social security tax, being 128400>118700	2340*6%	140.4
medicare tax	2340*1.5%	35.1
SUTA, being 118700>2340	0	0
FUTA, being 118700>2340	0	0
Employer's Payroll Tax Expense:		175.5