Question

An employee works 46 hours (46 - 40 were overtime hours) during a workweek in December of 2021. He earns $42.50/hour, with his employer paying 1.5 times the regular rate of pay for overtime hours. To date, he has earned $142,200 during the year. He has requested that his employer withhold 5.5% of gross pay, which is to be contributed to a 403(b) plan. Taxable income for federal income tax withholding = $ Taxable income for social security tax = $ Taxable income for medicare tax = $

Answer 1

To calculate the taxable income for federal income tax withholding, social security tax, and medicare tax, we need to follow these steps:

Step 1: Calculate the total gross pay for the workweek

Regular hours = 40

Overtime hours = 46 - 40 = 6

Regular pay = Regular hours * Hourly rate = 40 * $42.50 = $1700

Overtime pay = Overtime hours * (Hourly rate * 1.5) = 6 * ($42.50 * 1.5) = $382.50

Total gross pay = Regular pay + Overtime pay = $1700 + $382.50 = $2082.50

Step 2: Calculate the total gross pay for the year

To date, the employee has earned $142,200 during the year.

Step 3: Calculate the withholding for the 403(b) plan

The employee requested that 5.5% of gross pay be withheld for the 403(b) plan.

403(b) withholding = Total gross pay * 0.055 = $2082.50 * 0.055 = $114.54

Step 4: Calculate the taxable income for federal income tax withholding

Taxable income for federal income tax withholding = Total gross pay - 403(b) withholding = $2082.50 - $114.54 = $1967.96

Step 5: Calculate the taxable income for social security tax

The Social Security tax only applies to the first $142,800 earned during the year. Since the employee has already earned $142,200, the taxable income for social security tax is $142,200.

Step 6: Calculate the taxable income for medicare tax

The Medicare tax applies to all earnings with no maximum limit. Therefore, the taxable income for medicare tax is $142,200.

Therefore, the taxable income for federal income tax withholding is $1967.96, the taxable income for social security tax is $142,200, and the taxable income for medicare tax is $142,200.

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