Prior to the last weekly payroll period of the calendar year,the cumulative earnings of employees A and B are $106,150 and $91,000,respectively.Their earnings for the last completed payroll period of the year are $850 each.The amount of earnings subject to social security tax at 6% is $106,800.All earnings are subject to Medicare tax of 1.5%.Assuming that the payroll will be paid on December 29,what will be the employer's total FICA tax for this payroll period on the two salary amounts of $850 each?

Question

Quizplus · Accepted Answer

To calculate the employer's total FICA tax for this payroll period, we need to first calculate the total amount of social security and Medicare tax for the two employees.

For employee A, the amount of earnings subject to social security tax is $106,150, which is already over the limit of $106,800. So, the social security tax for employee A will be $6,408 (6% of $106,800). The Medicare tax for employee A will be $1,592.25 (1.5% of $106,150 + $850).

For employee B, the amount of earnings subject to social security tax is $91,000 + $850 = $91,850. So, the social security tax for employee B will be $5,511 (6% of $91,850). The Medicare tax for employee B will be $1,383.75 (1.5% of $91,850 + $850).

Therefore, the total amount of social security tax for both employees is $6,408 + $5,511 = $11,919, and the total amount of Medicare tax for both employees is $1,592.25 + $1,383.75 = $2,976.

Finally, the employer's total FICA tax for this payroll period on the two salary amounts of $850 each is the sum of the social security and Medicare tax, which is $11,919 + $2,976 = $14,895. Dividing this by the total earnings of both employees ($850 + $850 = $1,700), the percentage of FICA tax is approximately 8.76%. Therefore, the correct answer is B) $115.50.

Prior to the Last Weekly Payroll Period of the Calendar