Instruction 3-1 Use these tax rates and taxable wage: OASDI—(Employees\' and Emp
ID: 2450058 • Letter: I
Question
Instruction 3-1 Use these tax rates and taxable wage: OASDI—(Employees' and Employers' 6.2%; Self-Employed 12.4%) on first $113,700. HI—(Employees' and Employers' 1.45%; Self-Employed 2.9%) on all taxable wages. Note: Employees' supplemental HI rate of 0.9% on wages in excess of $200,000 is not applicable. Refer to Instruction 3-1. Dee is paid $1,345 on November 8, 20--. Dee had cumulative gross earnings, including overtime pay, of $115,700 prior to this pay. a) The amount of OASDI taxes to withhold from Dee's pay is b) The amount of HI taxes to withhold from Dee's pay is
Explanation / Answer
Answer:
A) OASDI ends once you reach $113700. Since Dee is now at $115700, she is only taxed on an additional $2,000. $2,000 x 0.062 = $124.
B)1.45% is typically medicare/medicaid taxes, not HI taxes. If someone earned more than $50,000 a year, they are typically charged 8.25% on income in Hawaii. In any event, it is $1,345 x 0.0145 = $19.5025