Question

An employee earns $5,950 per month working for an employer. The FICA tax rate for Social Security is 6.2% of the first $128,400 of earnings each calendar year and the FICA tax rate for Medicare is 1.45% of all earnings. The current FUTA tax rate is 0.6%, and the SUTA tax rate is 5.4%. Both unemployment taxes are applied to the first $7,000 of an employee’s pay. The employee has $200 in federal income taxes withheld. The employee has voluntary deductions for health insurance of $168 and contributes $84 to a retirement plan each month. What is the amount the employer should record as payroll taxes expense for the employee for the month of January?

Answer 1

Answer: $812.18

Explanation:

FUTA and SUTA will be included in this calculation as they are payable by the employer not the employee.

This is the month of January hence this is the first salary of the year meaning that all taxes are applicable as no limit on taxation has been reached.

Taxes payable by employer are = (5,950 * 6.2% for FICA Social) + (5,950 * 1.45% for FICA Medicare) + (5,950 * 0.6% for FUTA) + (5,950 * 5.4% for SUTA)

= 368.90 + 86.28 + 35.70 + 321.30

= $812.18

The amount the employer should record $812.18 as payroll taxes expense for the employee for the month of January