Question

Computing payroll taxes LO P2, P3 BMX Company has one employee. FICA Social Security taxes are 6.20% of the first $117,000 paid to its employee, and FICA Medicare taxes are 1.45% of gross pay. For BMX, its FUTA taxes are 0.60% and SUTA taxes are 2.90% of the first $7,000 paid to its employee.

Gross Pay through August Gross Pay for September
a. $ 5,500 $2,000
b. 16,500 3,200
c. 100,000 20,500
Compute BMX's amounts for each of these four taxes as applied to the employee's gross earnings for r under each of three separate situations (a), (b), and (c). (Round your answers to 2 decimal places.)

Answer 1

Medicare:

case a 2,000 x 1.45% = 29

case b 3,200 x 1.45% = 46.4

case c 20,500 x 1.45% =297.25

Social Security

case a 2,000 x 6.2% = 124

case b 3,200 x 6.2% = 198.4

case c 20,500 x 6.2% = 1,271

FUTA

case a $ 9

SUTA

case a $43.50

Step-by-step explanation:

Medicare and Social Security ceilling for the year 2020 are 137,700

Thus, the three employees are under that and their September wages are fully taxable.

SUTA and FUTA ceilling are at 7000

so case b and c do not py any of these taxes

case a will only be taxed up to 7000

so 7,000 - 5,500 = 1,500 the remainder 700 dollar are tax-free from SUTA and FUTA

1,500 x 0.060% = 9

1,500 x 0.0290% = 43.5