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    Janelle101's Avatar
    Janelle101 Posts: 60, Reputation: 1
    Junior Member
    		  
    #1

    Dec 7, 2009, 05:56 AM
    Payroll Calculation
    Can you please help me. I've showed my working but I believe something is incorrect. :confused:

    Prior to the last weekly payroll period of the calendar year, the cumulative earnings of employees A and B are $99,350 and $91,000 respectively. Their earnings for the last completed payroll period of the year are $850 each. The amount of earning subject to social security tax at 6% is $100,000. All earnings are subject to Medicare tax of 1.5%. Assuming that the payroll will be paid on December 29, what will be the employer’s total FICA tax for this payroll period on the two salary amounts of $850 each?

    My Working:
    .06 * 850 = $51.00
    .015 * 850 = 12.75 = 63.75 x 2 = $127.50
    InfoJunkie4Life's Avatar
    InfoJunkie4Life Posts: 1,409, Reputation: 81
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    #2

    Dec 8, 2009, 05:50 PM

    If the 6% SS tax is only subject to the first $100,000 then wouldn't only $650 of person A's check be taxable by that tax. If he accepts the $850 it puts him at $102,000, and no longer subject to the 6% tax, or does it go into a different bracket. Either way, the $100,000 mark is where you're getting things mixed up.
    Janelle101's Avatar
    Janelle101 Posts: 60, Reputation: 1
    Junior Member
    		  
    #3

    Dec 9, 2009, 05:27 AM

    So what must I do, I don't understand.
    InfoJunkie4Life's Avatar
    InfoJunkie4Life Posts: 1,409, Reputation: 81
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    #4

    Dec 9, 2009, 08:42 AM

    Person A
    $100,000 is the limit for Social Security Tax
    $99,350 + $850 = $100,200
    Thus $200 of this person's check is non-SS-taxable.
    $850-$200 = $650
    $650 * 6% = $39
    The entire check is taxable by Medicare standards...
    thus
    $850*1.5% = $12.75
    $39 + $12.75 = $51.75
    ...
    Person B
    His pay ytd plus the current pay is still under $100,000. This means that his entire check is taxable by both SS and Medicare.
    Janelle101's Avatar
    Janelle101 Posts: 60, Reputation: 1
    Junior Member
    		  
    #5

    Dec 10, 2009, 02:03 PM

    Thank you a lot.
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