Question

Understanding Hospital Insurance or HI The HI portion of the FICA tax is withheld on total earnings without regard to a wage cap. The HI stands for "hospital insurance" which is actually a trust fund. The HI Trust Fund is used to pay part of inpatient hospital care, skilled nursing care and other services for eligible disabled and elderly people. For employees whose earnings exceed $200,000, employersa must withhold the Additional Medicare Tax as follows. Hospital Example has earnings to date of $192,750 and current earnings of $32,125. Withholding on behalf of Hospital Example $465.81 Standard HI withholding ($32,125 * 1.45%) Additional HI Withholding ([{$192,750 + $32,125} - $200,000) * 0.9%) $223.88 a source: https://www.irs.gov/newsroom/what-is-the-additional-medicare-tax: Withholding / Estimated Tax. Employers must withhold this tax from wages or compensation when they pay employees more than $200,000 in a calendar year. (Note: The wage threshold ($200,000) is based on filing status. Single, Head-of-Household, Qualified Widower: $200,000; MF): $250,000; MFS: $125,000). Tackle It Complete the following: 1. Another name for the Hospital Insurance trust fund is 2. The employer HI rate is in decimal form or in percentage 3. The Supplemental HI rate is in decimal form or in percentage 4. The HI wage cap %. olo. Compute the withholding for the following employees whose filing status is single.

Answer 1

1. Medicare

2. .0145in decimal or 1.45%

3. 09 in decimal or 9%

4. 200000

A 68600*1.45%=994.7

B 130400*.0145=1890.8

C 191000*.0145=275.5

(( 191000+14325)-200000)*.9%= 449.25