Use the following information for the Exercises below. The following information
ID: 2407589 • Letter: U
Question
Use the following information for the Exercises below. The following information applies to the questions displayed below.) BMX Company has one employee. FICA Social Security taxes are 6.2% of the first $118.500 paid to its employee, and FOA Medicare taxes are 1.45% of gross pay. For BMX, its FUTA taxes are 0.6% and SUTA taxes are 2.9% of the first $7,000 paid to its employee Gross Pay for September $ 1,700 4,000 9,900 Gross Pay through August a. $ 6,400 20,100 . 114,100 ?. Exercise 11-5 Computing payroll taxes LO P2, P3 Compute BMX's amounts for each of these four taxes as applied to the employee's gross earnings for September under each of three separate situations (a), (b), and (c).(Round your answers to 2 decimal places.)Explanation / Answer
a.
since total earnings of employee through september (6,400+1,700 = 8,100) is within 118,500, on total 1700 paid during september, social security tax is applicable. For FUTA and SUTA limit available is 7000-6400= 600, hence tax paid only on 600
b
since total earnings of employee through september (20,100+4,000= 24,100) is within 118,500, on total 4,000 paid during september, social security tax is applicable. No FUTA and SUTA taxes are further paid as threshold limit crossed.
c
Till august employee was paid 114,100. limit available for social security tax is 118,500-114,100 = 4,400 only. hence, of the 9900 paid only 4,400 is subject to social security. for other taxes no limits applicable. No unemployment taxes payable.
September earnings subject to tax Tax rate Tax amount FICA -SC 1,700 6.20% 105.40 FICA- MC 1,700 1.45% 24.65 FUTA 600 0.60% 3.60 SUTA 600 2.90% 17.40 151.05