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

Example 3-2

Wallington Company has 100 employees, each earning $525.25 a week.

OASDI
Amount of OASDI tax withheld from each employee’s paycheck each week:		$32.57		(6.2% × $525.25)
Total tax withheld from the 100 employees’ wages:		$3,257.00		($32.57 × 100)
Tax on employer:		$3,256.55		[6.2% × ($525.25 × 100)]
HI
Amount of HI tax withheld from each employee’s paycheck each week:		$7.62		(1.45% × $525.25)
Total tax withheld from the 100 employees’ wages is:		$762.00		($7.62 × 100)
Tax on employer:		$761.61		[1.45% × ($525.25 × 100)]

Audrey Martin and Beth James are partners in the Country Gift Shop, which employs the individuals listed below. Paychecks are distributed every Friday to all employees. Based on the information given, compute the amounts listed below for a weekly payroll period.

If required, round your answers to nearest cent and use the rounded answers in subsequent computations. Round your final answers to the nearest cent. If an amount is zero, enter "0".

Name and Position	Salary	OASDI Taxable Earnings	OASDI Tax	HI Taxable Earnings	HI Tax
Zena Vertin, Office	$ 700 per week	$	$	$	$
Nicole Norge, Sales	2,980 per month
Bob Mert, Delivery	485 per week
Audrey Martin, Partner	950 per week
Beth James, Partner	950 per week
	Totals	$	$	$	$

Employer's OASDI Tax	$
Employer's HI Tax	$