Chapter 3, Problem 1PB

To determine

Calculate the FICA taxes for each employee and the employer’s FICA taxes.

Explanation of Solution

FICA tax refers to the Federal Insurance Contribution Act tax which is Country U.S law that creates the payroll tax requiring deductions.

FICA imposes two taxes on the employer and the employee. In this, one tax would finances the federal old age, survivors and disability insurance programs which would be called as the OASDI. The other tax would finance the hospital insurance (HI) or the Medicare program.

Calculate the FICA taxes for each employee.

Employee No.	Employee Name	Bi- Weekly Taxable wage	OASDI	HI
711 (1)	Employee AJ	$ 1,100.00	$ 68.20	$ 15.95
512 (2)	Employee CJ	$ 1,000.00	$ 62.00	$ 14.50
624 (3)	Employee GR	$ 1,050.00	$ 65.10	$ 15.23
325 (4)	Employee HK	$ 1,250.00	$ 77.50	$ 18.13
422 (5)	Employee LH	$ 1,600.00	$ 99.20	$ 23.20
210 (6)	Employee RR	$ 1,310.50	$ 81.25	$ 19.00
111 (7)	Employee SR	$ 1,419.42	$ 88.00	$ 20.58
Totals		$ 8,729.92	$ 541.26	$ 126.58

Table (1)

Calculate the employers’ FICA taxes.

Particulars	Total taxable wages	Taxable Amount ($)
Employers' OSADI tax (8)	$ 8,729.92	$ 541.26
Employers' HI tax (9)	$ 8,729.92	$ 126.58

Table (2)

Working note (1):

Calculate the OASDI and HI for Employee No. 711.

$\begin{array}{c}\text{OASDI for Employee No}\text{. 711}=\left(\text{Bi-Weekly wages}\times \text{Tax rate}\right)\\ =\left(\$1,100.00\times \frac{6.20}{100}\right)\\ =\$68.20\end{array}$

$\begin{array}{c}\text{HI for Employee No}\text{.711}=\left(\text{Weekly wages}\times \text{Tax rate}\right)\\ =\left(\$1,100.00\times \frac{1.45}{100}\right)\\ =\$15.95\end{array}$

Working note (2):

Calculate the OASDI and HI for Employee No. 512.

$\begin{array}{c}\text{OASDI for Employee No}\text{. 512}=\left(\text{Bi-Weekly wages}\times \text{Tax rate}\right)\\ =\left(\$1,000.00\times \frac{6.20}{100}\right)\\ =\$62.00\end{array}$

$\begin{array}{c}\text{HI for Employee No}\text{. 512}=\left(\text{Bi-Weekly wages}\times \text{Tax rate}\right)\\ =\left(\$1,000.00\times \frac{1.45}{100}\right)\\ =\$14.50\end{array}$

Working note (3):

Calculate the OASDI and HI for Employee No. 624.

$\begin{array}{c}\text{OASDI for Employee No}\text{. 624}=\left(\text{Bi-Weekly wages}\times \text{Tax rate}\right)\\ =\left(\$1,050.00\times \frac{6.20}{100}\right)\\ =\$65.10\end{array}$

$\begin{array}{c}\text{HI for Employee No}\text{. 624}=\left(\text{Bi-Weekly wages}\times \text{Tax rate}\right)\\ =\left(\$1,050.00\times \frac{1.45}{100}\right)\\ =\$15.23\end{array}$

Working note (4):

Calculate the OASDI and HI for Employee No. 325.

$\begin{array}{c}\text{OASDI for Employee No}\text{. 325}=\left(\text{Bi-Weekly wages}\times \text{Tax rate}\right)\\ =\left(\$1,250.40\times \frac{6.20}{100}\right)\\ =\$77.50\end{array}$

$\begin{array}{c}\text{HI for Employee CC}=\left(\text{Bi-Weekly wages}\times \text{Tax rate}\right)\\ =\left(\$1,250.00\times \frac{1.45}{100}\right)\\ =\$18.13\end{array}$

Working note (5):

Calculate the OASDI and HI for Employee No. 422.

$\begin{array}{c}\text{OASDI for Employee No}\text{. 422}=\left(\text{Bi-Weekly wages}\times \text{Tax rate}\right)\\ =\left(\$1,600\times \frac{6.20}{100}\right)\\ =\$99.20\end{array}$

$\begin{array}{c}\text{HI for Employee No}\text{. 422}=\left(\text{Bi-Weekly wages}\times \text{Tax rate}\right)\\ =\left(\$1,600.00\times \frac{1.45}{100}\right)\\ =\$23.20\end{array}$

Working note (6):

Calculate the OASDI and HI for Employee No. 210.

$\begin{array}{c}\text{OASDI for Employee No}\text{. 210}=\left(\text{Bi-Weekly wages}\times \text{Tax rate}\right)\\ =\left(\$1,310.50\times \frac{6.20}{100}\right)\\ =\$81.25\end{array}$

$\begin{array}{c}\text{HI for Employee No}\text{. 210}=\left(\text{Bi-Weekly wages}\times \text{Tax rate}\right)\\ =\left(\$1,310.50\times \frac{1.45}{100}\right)\\ =\$19.00\end{array}$

Working note (7):

Calculate the OASDI and HI for Employee No. 111.

$\begin{array}{c}\text{OASDI for Employee No}\text{. 111}=\left(\text{Bi-Weekly wages}\times \text{Tax rate}\right)\\ =\left(\$1,419.42\times \frac{6.20}{100}\right)\\ =\$88.00\end{array}$

$\begin{array}{c}\text{HI for Employee No}\text{. 111}=\left(\text{Bi-Weekly wages}\times \text{Tax rate}\right)\\ =\left(\$1,419.42\times \frac{1.45}{100}\right)\\ =\$20.58\end{array}$

Working note (8):

Calculate the Employers’ OSADI tax.

$\begin{array}{c}\text{Employer's OSADI}=\text{Total taxable wages}\times \text{Tax rate}\\ =\left(\$8,729.92\times \frac{6.20}{100}\right)\\ =\$541.26\end{array}$

Working note (9):

Calculate the Employers’ HI tax.

$\begin{array}{c}\text{Employer's HI tax}=\text{Total taxable wages}\times \text{Tax rate}\\ =\left(\$8,729.92\times \frac{1.45}{100}\right)\\ =\$126.58\end{array}$