Question
Exercise 9-11A Calculating employee and employer payroll taxes Sky Co. employed Tom Mills in Year 1. Tom earned $5,100 per month and worked the entire
Exercise 9-11A Calculating employee and employer payroll taxes
Sky Co. employed Tom Mills in Year 1. Tom earned $5,100 per month and worked the entire year. Assume the Social Security tax rate is 6 percent for the first $130,000 of earnings, and the Medicare tax rate is 1.5 percent. Toms federal income tax withholding amount is $900 per month. Use 5.4 percent for the state unemployment tax rate and .06 percent for the federal unemployment tax rate on the first $7,000 of earnings per employee.
Required
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Answer the following questions:
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What is Toms net pay per month?
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What amount does Tom pay monthly in FICA taxes?
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What is the total payroll tax expense for Sky Co. for January, Year 1? February, Year 1? March, Year 1? December, Year 1?
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Assume that instead of $5,100 per month Tom earned $11,000 per month. Based on this new level of income Toms new federal income tax withholding is $2,000. Answer the questions in Requirement a.
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