Gary Marks is paid on a monthly basis. For the month of January of the current year, he earned a total of $8,638. FICA tax for Social Security is 6.2% on the first $128,400 of earnings each calendar year and the FICA tax for Medicare is 1.45% of all earnings. The FUTA tax rate is 0.6%, 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 $1,433.27. What is the amount of the employer's payroll taxes expenses for this employee? (Round your intermediate calculations to two decimal places.) Multiple Choice a. $42.00 b. $1,080.81 c. $535.56 d. $125.25 e. $378.00

Question

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valetta valetta · Answer 1 · 2019-12-12T06:44:28+01:00

Answer:

option (b) $1080.81

Explanation:

Data provided in the question:

Earnings = $8,638

Social Security Tax = 6.2% on the first $128,400

FICA tax for Medicare = 1.45% all earnings

FUTA tax rate = 0.6%

SUTA tax rate = 5.4%

FUTA and SUTA are applied to an income of first $7,000

Now,

Employer's payroll taxes expense

= Social Security Tax + Medicare tax + FUTA + SUTA

= ( 6.2% of $8,638 ) + (1.45% of $8,638 ) + ( 0.6% of $7000 ) + ( 5.4% of $7000 )

= ( 0.062 × $8,638 ) + ( 0.0145 × $8,638 ) + ( 0.006 × $7,000 ) + ( 0.054 × $7,000 )

= $535.556 + $125.251 + $42 + $378

= $1080.807 ≈ $1080.81

Hence,

answer is option (b) $1080.81