Question

During 2020, Mike's current FICA taxable is $2,700 and will not change for the remainder of the year. As of the 48th pay, he had earned $134,400 as FICA taxable income (he had a bonus earlier in the year). Determine the amount of FICA taxes to be withheld from the next three payroll periods.

Answer 1

Social Security:

Week 49 = $167.4

Week 50 = $37.20

Week 51 = $0

Medicare Tax:

Week 49 = $39.15

Week 50 = $39.15

Week 51 = $39.15

Step-by-step explanation:

Note: This question is not complete. But I have found similar question on the internet and in that question we are asked to assume the Tax Caps 2020. So, we will solving this question accordingly.

Solution:

According to 2020 slabs Social Security W/H, the upper limit is $137,700, after this amount employer will not withhold social security tax.

On the other hand, there is no limit for Medicare Tax.

According to the question, we know that, Mike's Pay period per amount = $2700.

And, until 48th pay, he has earned $134,400

So,

For week 49, the amount of 2700 will be added to the net amount.

$134,400 + $2700 = $ 137,100

Hence, it does not breach the upper limit so, it will be taxed to $2700 only.

%6.2 x 2700 = $167.4

For Week 50, now the net amount is $ 137,100, and further $2700 will definitely breach the upper limit by $600.

$ 137,700 - $137,100 = $600

So, the $600 will be taxed for 6.2%

6.2% x $600 = $37.20

For week 51, there is clear breach of the upper limit, so according to the 2020 slab for social security, there will be no social security tax over the limit of $137,700. Hence, it will be 0.

Now, for Medicare Tax:

There is no limit.

And 1.45% on the FICA.

FICA earned per period = $2700

Hence,

1.45% x $2700 = $39.15 for each week.

So,

Social Security:

Week 49 = $167.4

Week 50 = $37.20

Week 51 = $0

Medicare Tax:

Week 49 = $39.15

Week 50 = $39.15

Week 51 = $39.15