Fernando Black has $6,800 cumulative earnings during the calendar year and earned $950 during the current pay period. If the state unemployment tax is 5.4 percent of the first $7,000, the federal unemployment tax is 0.6 percent of the first $7,000, the FICA Social Security tax is 6.2 percent of the first $113,700, and FICA Medicare tax is 1.45 percent on all earnings, the amounts placed in the Taxable Earnings columns of the payroll register are

Question

Quizplus · Accepted Answer

The taxable earnings for state unemployment tax and federal unemployment tax are calculated by taking the lesser of the total earnings or the maximum taxable earnings of $7,000.

For state unemployment tax, the taxable earnings are $6,800 because that is the total earnings amount.

For federal unemployment tax, the taxable earnings are also $6,800 because that is the total earnings amount.

For Social Security tax, the taxable earnings are the lesser of the total earnings ($6,800) or the maximum taxable earnings ($113,700), which is $6,800. The amount of Social Security tax to be withheld is $6,800 x 6.2% = $421.60. This is because Social Security tax only applies to the first $113,700 of earnings.

For Medicare tax, the entire $6,800 is taxable, so the amount of Medicare tax to be withheld is $6,800 x 1.45% = $98.60.

Therefore, the amounts placed in the Taxable Earnings columns of the payroll register are:

State unemployment: $6,800
Federal unemployment: $6,800
Social Security: $421.60
Medicare: $98.60

Fernando Black Has $6,800 Cumulative Earnings During the Calendar Year