Alfred Spindle earned gross wages of $1,620 for the week ended June 21, 2013. His gross wages year to date, prior to his June 21 paycheck, are $38,556. He had $88 withheld from his pay for federal income taxes, and $16 for health insurance. Social Security and is 6.2% and Medicare tax is 1.45%; the federal unemployment tax rate is .8% and the state unemployment tax rate is 4.2%, both on a maximum of $7,000 per each employee's annual earnings. What is the total employer payroll tax expense from Alfred's June 21, 2013, paycheck?

Question

Quizplus · Accepted Answer

First, we need to calculate Alfred's net pay:

Gross pay - Federal income tax - Health insurance = Net pay

$1,620 - $88 - $16 = $1,516

Next, we need to calculate the employer payroll tax expense:

Social Security tax = $1,620 x 6.2% = $100.44
Medicare tax = $1,620 x 1.45% = $23.49
Federal unemployment tax = $7,000 x 0.8% = $56.00
State unemployment tax = $7,000 x 4.2% = $294.00

Total employer payroll tax expense = $100.44 + $23.49 + $56.00 + $294.00 = $473.93

Therefore, the correct answer is B) $123.93, which is the amount of payroll tax expense that Alfred's employer would need to pay for this paycheck.

Alfred Spindle Earned Gross Wages of $1,620 for the Week