Rick O'Shea, the only employee of Hunter Furniture Company, makes $30,000 per year and is paid once a month. For the month of January, his federal income taxes withheld are $180, state income taxes withheld are $37, social security is 6.2% on a maximum wages of $106,800, Medicare tax is 1.45%, State Unemployment Tax is 4.2%, and Federal Unemployment tax is .8%, both on a maximum wages of $7,000 per employee. What is the employer's payroll tax expense from Rick's paycheck?

Question

Quizplus · Accepted Answer

First, we need to calculate Rick's total taxable wages for the month of January which is his annual salary divided by 12: $30,000 / 12 = $2,500.
Next, we need to calculate Rick's social security tax: 6.2% x $2,500 = $155.
Then, we calculate Rick's Medicare tax: 1.45% x $2,500 = $36.25.
We also need to calculate the state unemployment tax: 4.2% x $2,500 = $105.
And the federal unemployment tax: .8% x $2,500 = $20.
Therefore, the employer's payroll tax expense from Rick's paycheck would be the sum of all the taxes calculated: $155 + $36.25 + $105 + $20 = $316.25. So, the best choice is C.

Rick O'Shea, the Only Employee of Hunter Furniture Company, Makes