Assume that social security taxes are payable at a 6% rate and Medicare taxes are payable at a 1.5% rate with no maximum earnings,and that federal and state unemployment compensation taxes total 4.6% on the first $7,000 of earnings.If an employee earns $2,500 for the current week and the employee's year-to-date earnings before this week were $6,800,what is the total employer payroll taxes related to the current week?
A) $187.50
B) $196.70
C) $344.50
D) $9.20

Question

Quizplus · Accepted Answer

The total employer payroll taxes related to the current week can be calculated by considering the Medicare tax (1.5% of $2,500 = $37.50) and the federal and state unemployment compensation taxes. Since the employee's year-to-date earnings were $6,800 and the limit for unemployment taxes is on the first $7,000 of earnings, only $200 of this week's earnings ($7,000 - $6,800) are subject to the 4.6% unemployment tax ($9.20). Social Security taxes are not mentioned as part of the employer's responsibility in this question, and the Medicare tax applies to all earnings without a maximum. Therefore, the total is $37.50 (Medicare) + $9.20 (unemployment) = $46.70. However, the correct interpretation involves considering all applicable taxes, including the employer's portion of Social Security taxes, which is 6% of $2,500 ($150). Thus, the total employer payroll taxes are $150 (Social Security) + $37.50 (Medicare) + $9.20 (unemployment) = $196.70.

Assume That Social Security Taxes Are Payable at a 6