Question

Suppose Jim worked 62 hours during this payroll period and is paid $14.00 per hour. Assume FICA is 6.2%, Medicare is 1.45% and withholding tax is 10%.

1. Calculate Jim's net paycheck for the period.
2. Calculate Jim's employer's payroll tax expense for the period.
3. Calculate Jim's employer's total payroll tax liability for the period.

Answer 1

1. $714.798

2. $66.402

3. $141.484

Step-by-step explanation:

1. Gross pay = 62 hours worked x $14.00 per hour

= $868

Net paycheck = Gross pay - Tax

= 868 - [(868) x (6.2%+1.45%+10%)

= $868 - $153.202

= $714.798

2. Employer's payroll tax expense = (6.2%+1.45%) x 868

= $66.402

3. Jim's employer's total payroll tax liability for the period.

868*6.2% (FICA taxes - Employee) + 868*6.2% (FICA taxes - Employer's share) + 868*1.45% (Medicare taxes - Employee) + 868*1.45% (Medicare taxes - Employer's share) + 868*10% (Withholding tax).

= 53.816 + 53.816 + 12.586 + 12.586 + 8.68

Total = $141.484