Roy DeSoto earns a regular hourly salary of $24.50. He is paid time-and-a-half for all hours in excess of 40 in the week. For the week ended March 8, 2019, he worked a total of 50 hours. His gross wages year to date, prior to his March 8, paycheck, are $11,980. Social Security Tax is 6.2% on a maximum of $122,700 of gross wages per year, Medicare Tax is 1.45%, federal unemployment tax is 0.6% and state unemployment tax is 4.2%, both on a maximum of $7,000 of gross wages per year. What is the employer's payroll tax expense for Roy for the week ended March 8, 2019?

Question

Quizplus · Accepted Answer

Roy worked 50 hours, with 10 of those being overtime. His regular pay for 40 hours is $24.50 * 40 = $980. His overtime pay is 10 hours * $24.50 * 1.5 = $367.50. Total pay for the week is $980 + $367.50 = $1347.50. Since his year-to-date earnings before this paycheck were $11,980, and the maximum for unemployment taxes is $7,000, he has already exceeded this limit, so no unemployment taxes apply. The employer's payroll tax expense is thus only for Social Security Tax (6.2% of $1347.50 = $83.545) and Medicare Tax (1.45% of $1347.50 = $19.53925). The total is $83.545 + $19.53925 = $103.08425, rounded to $103.09.

Roy DeSoto Earns a Regular Hourly Salary of $24