1 **Payroll Tax Calculation Exercise**Sky Company employed Tom Mills in Year 1. Tom earned $4,900 per month and worked the entire year. Assume the following tax rates:- **Social Security tax rate:** 6% for the first $110,000 of earnings- **Medicare tax rate:** 1.5%- **Federal income tax withholding amount:** $920 per month- **State unemployment tax rate:** 5.4%- **Federal unemployment tax rate:** 0.6% for the first $7,000 of earnings per employee**Required****a. Answer the following questions:**1. What is Tom’s net pay per month?2. What amount does Tom pay monthly in FICA payroll taxes?3. What is the total payroll tax expense for Sky Company for January Year 1? February Year 1? March Year 1? December Year 1?**b. If Tom instead earned $9,800 per month, answer the following:**1. What is Tom’s net pay per month?2. What amount does Tom pay monthly in FICA payroll taxes?3. What is the total payroll tax expense for Sky Company for January Year 1? February Year 1? March Year 1? December Year 1?**Table: Total Employer Payroll Tax**| | Total Employer Payroll Tax ||----------------|-----------------------------|| **January** | $1,155.00 || **February** | $735.00 || **March** | $735.00 || **December** | |*Assume that instead of $4,900 per month Tom earned $9,800 per month. What is the total payroll tax expense for Sky Company for January Year 1? February Year 1? March Year 1? December Year 1? (Round your answers to 2 decimal places.)*

Payroll tax: A payroll tax is a tax withheld from an employee's salary by an employer who remits it to the government on their behalf. The tax is based on wages, salaries, and tips paid to employees.Step 4: Answer (A3) - Calculation of Total Payroll Tax Expense for SKY Company.ParticularJanuaryFebruaryMarchDecemberSocial Security Tax [4,900x 6%]294.00294.00294.00294.00Medicare Care Tax[4,900x 1,5%]73.5073.50 73.50 73.50State Unemployment Tax [7,000 x 5.4+0.6=6%]294420-294=12600Total Payroll Tax Expenses661.50493.50367.50367.50State Unemployment Tax CalculationOn First 5300 in January (5.4 % + 0.6%) = 6%5300 x 6%318Next 1700 in February (7000 - 5300) @ 6%1700 x 6%102SoParticularJanuaryFebruaryMarchDecemberTotal Payroll Tax Expenses661.50493.50367.50367.50