Question

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?

Answer 1

Computation/Explanation:
Employee A:
SS Tax = $650 x 6% = $39
Medicare Tax = $850 x 1.5% = $12.75

Employee B:
SS Tax = $850 x 6% = $51
Medicare Tax = $850 x 1.5% = $12.75

Total FICA tax: $39 + $12.75 + $51 + $12.75 = $115.50

Please note that we used $650 for SS Tax for Employee A’s earning because only $650 is left until we reach the limit of $100,000.