An employee earned $4,600 in February working for an employer.Cumulative earnings of the previous pay periods are $4,800.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 0.6%,and the SUTA tax rate is 4.4%.Both unemployment taxes are applied to the first $7,000 of an employee's pay.What is the amount the employer should record as payroll taxes expense for the month of February?
A)$581.90
B)$110.00
C)$351.90
D)$461.90
E)$230.00

Question

Quizplus · Accepted Answer

The employer's payroll taxes expense includes FICA taxes (Social Security and Medicare) and unemployment taxes (FUTA and SUTA). For February, the Social Security tax is 6.2% of $4,600, and the Medicare tax is 1.45% of $4,600. Since the cumulative earnings before February were $4,800, only $2,200 of the February earnings are subject to unemployment taxes (FUTA and SUTA) because the total earnings exceed $7,000. Calculate each tax and sum them to find the total payroll taxes expense.

An Employee Earned $4,600 in February Working for an Employer