An employee earns $5,750 per month working for an employer. The FICA tax rate fo
ID: 2458798 • Letter: A
Question
An employee earns $5,750 per month working for an employer. The FICA tax rate for Social Security is 6.2% and the FICA tax rate for Medicare is 1.45%. The current FUTA tax rate is 0.8%, 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 $192 in federal income taxes withheld. The employee has voluntary deductions for health insurance of $160 and contributes $80 to a retirement plan each month. What is the amount of net pay for the employee for the month of January?
Explanation / Answer
CALCULATION OF TOTAL PAYROLL TAX:-
FICA TAX FOR SOCIAL SECURITY ($5750 * 6.2%) =$356.50
FICA TAX FOR MEDICARE ($5750 * 1.45%) =$83.375
FUTA TAX ($5750 * 0.8%) =$46.00
SUTA TAX ($5750 * 5.4%) =310.50
TOTAL TAX EXPENSES =$796.375
EMPLOYEE'S EARNING FOR THE MONTH JANUARY =$5750
LESS- TAX EXPENSES =($796.375)
NET PAY =$4953.625
NOTE:- THE FEDRAL INCOME TAX WITHHELD AND THE VOLUNTARY CONTRIBUTIONS ARE THE RESPONSBILITY OF EMPLOYEE TO PAY, SO IT IS NOT DEDUCTED FROM THE PAY.