Question

An employee works 50 hours (50-40 were overtime hours) during a workweek in December of 2015. He earns $9,500/month, with his employer paying 1.5 times the regular rate of pay for overtime hours. To date, he has earned $109,700 during the year. He has requested that his employer withhold 13% of gross pay to contribute to a 403(b) plan.

Calculate gross pay for the weekly pay period, then determine taxable income used to calculate federal income tax withholding, Social Security, and Medicare tax.

Answer 1

Gross Weekly Pay: $3,014.51

Taxable income for federal income tax withholding = $ 2,622.62

Taxable income for social security tax = $ 3,014.51

Taxable income for medicare tax = $ 3,014.51

Step-by-step explanation:

9,500(monthly pay) times 12 (paychecks in a year)=$114,000

$114,000 divide by 52(weeks in a year)=$2,192.31

$2,192.31(weekly pay) divide by 40 hours = $54.81/hr

$54.81 x 1.5(overtime)= $82.22

$82.22 x 10 (overtime hours worked)=$822.20

$2,192.31(weekly pay) + $822.20(overtime pay) = $3,041.51 (gross pay)

$3,041.51 (gross pay) x 13%(amount worker wants to withhold) = $391.89

$3,041.51(weekly pay) - $391.89 (contribution is 403b) = $2,622.62

Because the 403(b) plan is pre-taxable you would subtract the $391.89 from the gross pay and use the $2,622.62 to locate the federal income tax.

Because $109,700 + $3,014.51 = $112,741.51 is less than the $137,000 threshold, the whole amount of $3,014.51 is taxable by the 6.2% social security rate.

Because Medicare has no threshold, the $3,014.51 is taxable by the 1.45% Medicare rate.

Answer 2

(a) Calculate gross pay for the weekly pay period is $3,265.60.

(b) Taxable income used to calculate federal income tax withholding, Social Security, and Medicare tax is $98,280.07.

Step-by-step explanation:

From the question, we can obtain the following:

Number of regular weekly hours = 40

Number of regular monthly hours = Number of regular weekly hours * 4 = 40 * 4 = 160

Number of overtime hours during the workweek = 50 - 40 = 10

Monthly regular pay = $9,500

Weekly regular pay = Monthly regular pay / 4 = $2,375

Regular hourly rate = Monthly regular pay / Number of regular monthly hours = $9,500 / 160 = $59.38

Overtime rate = Regular hourly rate * 1.50 = $59.38 * 1.50 = $89.06

Overtime pay for the workweek = Number of overtime hours * Overtime rate = 10 * $89.06 = $890.60

We can therefore proceed as follows:

(a) Calculate gross pay for the weekly pay period

Gross pay for the weekly pay period = Weekly regular pay + Overtime pay for the workweek = $2,375 + $890.60 = $3,265.60

(b) Determine taxable income used to calculate federal income tax withholding, Social Security, and Medicare tax.

Gross pay = Amount earned to date + Gross pay for the weekly pay period = $109,700 + $3,265.60 = $112,965.60

Contribution to a 403(b) plan = Gross pay * 13% = $14,685.53

Taxable income = Gross pay - Contribution to a 403(b) plan = $112,965.60 - $14,685.53 = $98,280.07