Phil Phoenix is paid on a monthly basis. For the month of January of the current year, he earned a total of $8,288. FICA tax for Social Security is 6.2% and the FICA tax for Medicare is 1.45%. The FUTA tax rate is 0.8%, and the SUTA tax rate is 5.4%. Both unemployment taxes are applied to the first $7,000 of an employee's pay. The amount of Federal Income Tax withheld from his earnings was $1,375.17. What is the amount of the employer's annual payroll taxes expenses for this employee?
A) $56.00
B) $120.18
C) $378.00
D) $513.86
E) $1,068.04

Question

Quizplus · Accepted Answer

First, we need to calculate the employee's portion of FICA taxes:

- Social Security tax = $8,288 x 6.2% = $513.86
- Medicare tax = $8,288 x 1.45% = $120.18

Next, we need to calculate the employer's portion of payroll taxes:

- FUTA tax = $7,000 x 0.8% = $56.00
- SUTA tax = $7,000 x 5.4% = $378.00

Therefore, the total annual payroll tax expense for this employee is:

$513.86 (employer's portion of Social Security tax) 
+ $120.18 (employer's portion of Medicare tax) 
+ $56.00 (FUTA tax) 
+ $378.00 (SUTA tax) 
= $1,068.04

So, the correct answer is E.

Phil Phoenix Is Paid on a Monthly Basis