Business Mathematics Brief 12th Edition by Stanley Salzman ,Gary Clendenen, Charles Miller

Exercise 30

PAYROLL DEDUCTIONS Find the regular earnings, overtime earnings, gross earnings, Social Security tax (6.2%), Medicare tax (1.45%), and state disability insurance deduction ( 1%) for each employee. Assume that no employee will have earned more than the FICA or SDI maximum at the end of the current pay period. Assume that time and a half is paid for any overtime in a 40-hour week. (See Examples.)
EXAMPLE
Finding FICA Tax and Medicare Tax
Help Jessica Ramirez, the manager at a local Panera Bread, find the Social Security and Medicare tax that must be withheld from the weekly earnings of two employees.
(a) Kelleher: $362.40 gross earnings
(b) Kimbrel: $468.02 gross earnings
SOLUTION
In each case, the tax is rounded to the nearest cent.
(a)

(b)

EXAMPLE
Finding FICA Tax
Shannon Woolums has earned $112,634.05 so far this year. Her gross earnings for the current pay period are $5224.03. Find her Social Security tax.
SOLUTION
The Social Security tax is paid only on the first $115,000 in earnings. First, subtract earnings to date from $115,000 to find the amount subject to Social Security tax during the current pay period.

No additional Social Security tax will be withheld for the remainder of the year.
EXAMPLE
Finding FICA and Medicare Tax for the Self-Employed
Find the Social Security tax and the Medicare tax paid by Ta Shon Williams, a self-employed Web designer who had adjusted earnings of $53,820 this year.
SOLUTION

EXAMPLE
Finding State Disability Insurance Deductions
Find the state disability insurance deduction for an employee at Comet Auto Parts with gross earnings of $418 this pay period. The SDI rate is 1%, and the employee has not earned $31,800 this year.
SOLUTION
The state disability insurance deduction is $4.18 ($418 ×.01).