# Problem 3-5A (Algorithmic)<br/>Note: In this chapter and in all succeeding

work throughout the course, unless instructed otherwise, use the following rates, ceiling, and maximum taxes.

Employee and Employer OASDI: 6.20% $118,500 $7,347 Employee* and Employer HI: 1.45% No limit No maximum Self-employed OASDI: 12.4% $118,500 $14,694 Self-employed HI: 2.9% No limit No maximum

1. Carry the hourly rate and the overtime rate to 3 decimal places and then round off to 2 decimal places (round the hourly rate to 2 decimal places before multiplying by one and one-half to determine the over-time rate). 2. If the third decimal place is 5 or more, round to the next higher cent. 3. If the third decimal place is less than 5, simply drop the third decimal place. Examples: Monthly rate $1,827

Weekly rate ($1,827 × 12)/52 = $421.615 rounded to $421.62

Hourly rate $421.62/40 = $10.540 rounded to $10.54

O.T. rate $10.54 × 1.5 = $15.81 Also, use the minimum hourly wage of $7.25 in solving these problems and all that follow. *Employee HI: Plus an additional 0.9% on wages over $200,000. Also applicable to self-employed.

Example 3-1

In 20-- the annual salaries paid each of the officers of Abrew, Inc., follow. The officers are paid semimonthly on the 15th and the last day of the month. Compute the FICA taxes to be withheld from each officer's pay on (a) November 15 and (b) December 31.

If required, round your answers to nearest cent. If an amount is zero, enter "0".

a.

November 15 Name and Title Annual

Salary OASDI Taxable

Earnings OASDI Tax HI Taxable

Earnings HI Tax Hanks, Timothy, President $138480 $ $ $ $ Grath, John, VP Finance 114720 James, Sally, VP Sales 75600 Kimmel, Joan, VP Mfg. 55200 Wie, Pam, VP Personnel 54000 Grant, Mary, VP Secretary 39600

b.

December 31 Name and Title Annual

Salary OASDI Taxable

Earnings OASDI Tax HI Taxable

Earnings HI Tax Hanks, Timothy, President $138480 $ $ $ $ Grath, John, VP Finance 114720 James, Sally, VP Sales 75600 Kimmel, Joan, VP Mfg. 55200 Wie, Pam, VP Personnel 54000 Grant, Mary, VP Secretary 39600

Question 1

Problem 3-8A (Algorithmic)

Note: In this chapter and in all succeeding work throughout the course, unless instructed otherwise, use the following rates, ceiling, and maximum taxes.

Employee and Employer OASDI: 6.20% $118,500 $7,347 Employee* and Employer HI: 1.45% No limit No maximum Self-employed OASDI: 12.4% $118,500 $14,694 Self-employed HI: 2.9% No limit No maximum

1. Carry the hourly rate and the overtime rate to 3 decimal places and then round off to 2 decimal places (round the hourly rate to 2 decimal places before multiplying by one and one-half to determine the over-time rate). 2. If the third decimal place is 5 or more, round to the next higher cent. 3. If the third decimal place is less than 5, simply drop the third decimal place. Examples: Monthly rate $1,827

Weekly rate ($1,827 × 12)/52 = $421.615 rounded to $421.62

Hourly rate $421.62/40 = $10.540 rounded to $10.54

O.T. rate $10.54 × 1.5 = $15.81 Also, use the minimum hourly wage of $7.25 in solving these problems and all that follow. *Employee HI: Plus an additional 0.9% on wages over $200,000. Also applicable to self-employed.

Example 3-4

George Talbot receives wages amounting to $93,500. His net earnings from self-employment amount to $28,600. Talbot must count $25,000 of his earnings in determining taxable self-employment income for OASDI taxes.

FICA Taxable Wage Base − Wages Received = Taxable Self − Employment Income $118,500 − $93,500 = $25,000 Ralph Henwood was paid a salary of $79000 during 20-- by Odesto Company. In addition, during the year Henwood started his own business as a public accountant and reported a net business income of $49500 on his income tax return for 20--. Compute the following; round your answers to the nearest cent.

a. The amount of FICA taxes that was withheld from his earnings during 20-- by Odesto Company.

OASDI $ HI $ b. Henwood's self-employment taxes on the income derived from the public accounting business for 20--.

OASDI $ HI $

Question 2

Problem 3-2A (Algorithmic)

Note: In this chapter and in all succeeding work throughout the course, unless instructed otherwise, use the following rates, ceiling, and maximum taxes.

Employee and Employer OASDI: 6.20% $118,500 $7,347 Employee* and Employer HI: 1.45% No limit No maximum Self-employed OASDI: 12.4% $118,500 $14,694 Self-employed HI: 2.9% No limit No maximum

1. Carry the hourly rate and the overtime rate to 3 decimal places and then round off to 2 decimal places (round the hourly rate to 2 decimal places before multiplying by one and one-half to determine the over-time rate). 2. If the third decimal place is 5 or more, round to the next higher cent. 3. If the third decimal place is less than 5, simply drop the third decimal place. Examples: Monthly rate $1,827

Weekly rate ($1,827 × 12)/52 = $421.615 rounded to $421.62

Hourly rate $421.62/40 = $10.540 rounded to $10.54

O.T. rate $10.54 × 1.5 = $15.81 Also, use the minimum hourly wage of $7.25 in solving these problems and all that follow. *Employee HI: Plus an additional 0.9% on wages over $200,000. Also applicable to self-employed.

Example 3-1

During 2016, Rachael Parkins, president of Mathieson Company, was paid a semimonthly salary of $7,200. Compute the amount of FICA taxes that should be withheld from her. Round your answers to the nearest cent. If an amount is zero, enter "0".

OASDI HI a. 9th paycheck $ $ b. 17th paycheck $ $ c. 24th paycheck $ $ d. If Rachael Parkin's year-to-date earnings as of her 24th paycheck are $168,000, and her year-end bonus is $100,000, how much is the additional 0.9% HI tax withheld? $