Question

Wishing Well Works makes outdoor statuary, and operates in the state of Washington. Payroll taxes consist of FICA 8% collected from workers and 8% collected from the employers, up to an annual wage limit of $120,000), and Federal Income Tax at the flat rate of 20%. Also the FUTA tax rate is 1%, with an annual wage limit of $100,000. The company has only one employee who earns a monthly salary of $100,000. What is the dollar amount of Payroll Tax Expense for the month of January??

Answer 1

The Payroll Tax Expense for the month of January is $37,000.

Step-by-step explanation:

The Payroll Tax Expense for the month of January can be calculated by considering the FICA tax, Federal Income Tax, and FUTA tax.

1. Calculate the FICA tax for the employee by multiplying the monthly salary by 8%. In this case, it would be $100,000 * 0.08 = $8,000.
2. Calculate the employer's portion of the FICA tax by multiplying the monthly salary by 8%. Again, it would be $100,000 * 0.08 = $8,000.
3. Calculate the Federal Income Tax by multiplying the monthly salary by 20%. It would be $100,000 * 0.20 = $20,000.
4. Calculate the FUTA tax by multiplying the monthly salary by 1%. It would be $100,000 * 0.01 = $1,000.
5. Add up all the calculated taxes: $8,000 + $8,000 + $20,000 + $1,000 = $37,000.

Therefore, the Payroll Tax Expense for the month of January is $37,000.

Answer 2

The Payroll Tax Expense for the month of January is $36,000.

Step-by-step explanation:

The Payroll Tax Expense for the month of January can be calculated by determining the amounts of FICA and Federal Income Tax.

FICA: The employee pays 8% of their monthly salary for FICA. Since the employee earns $100,000 per month, the FICA payment would be 8% of $100,000, which is $8,000. The employer also pays 8% of the employee's monthly salary for FICA, which is $8,000.

Federal Income Tax: The flat rate for Federal Income Tax is 20%. Therefore, the employee's Federal Income Tax payment would be 20% of $100,000, which is $20,000.

Therefore, the total Payroll Tax Expense for the month of January is the sum of FICA and Federal Income Tax: $8,000 + $8,000 + $20,000 = $36,000.