McBean Farms has the following information on their Form 941:

What amount should be entered in Column 2,Lines 5a and 5c? (Assume no Section 125 health insurance and that none of the employees had exceeded the Social Security wage base. )

Question

McBean Farms has the following information on their Form 941:

What amount should be entered in Column 2,Lines 5a and 5c? (Assume no Section 125 health insurance and that none of the employees had exceeded the Social Security wage base. )

Quizplus · Accepted Answer

Based on the information given, we know that there are two amounts to be entered in Column 2, Lines 5a and 5c. Line 5a is for Social Security wages/tips, which are subject to a 6.2% tax rate. Line 5c is for Medicare wages/tips, which are subject to a 1.45% tax rate.

To calculate the amounts to be entered in these lines, we need to know the total Social Security and Medicare wages/tips paid to employees during the quarter. We do not have this information in the given data.

However, we can use the total wages/tips subject to federal income tax withholding (Line 2) as a rough estimate. Generally, Social Security and Medicare taxes are only withheld on the first $142,800 of wages per employee per year (as of 2021). So, if we assume that none of the employees have exceeded this wage base and that there were no Section 125 health insurance deductions, we can calculate the amounts for Lines 5a and 5c as follows:

Line 5a: Total wages subject to Social Security tax = Line 2 x 6.2%
= $280,657.56 x 0.062
= $17,400.67

Line 5c: Total wages subject to Medicare tax = Line 2 x 1.45%
= $280,657.56 x 0.0145
= $4,069.51

Therefore, the correct answer is A).

McBean Farms Has the Following Information on Their Form 941