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 $127,200 $7,886 40 Employee and Employer HI 1 45 No limit No maximum Self employed OASDI 12 4 $127,200 $15,772 80 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 6 Ned Fromton, an employer, files his employment tax return 20 days after the due date of the return The amount of tax that was unpaid is $6,000 Fromton's penalty is Failure to file (5 $6,000) $300 Note Any fraction of a month counts as a whole month Example 3 7 Yeld Company failed to pay its employment taxes of $5,000 for March (due April 16) until May 21 The failure to pay penalty assessed against Yeld Company is Failure to Pay Tax ($5,000 0 5 2) $50 00 Interest on Taxes Due ($5,000 0 04 35 365) 19 18 Total Penalty $69 18 Note In addition, a penalty for failure to make a timely deposit will also be assessed Vulcan Company is a monthly depositor whose tax liability for March 2018 is $2,710 1 What is the due date for the deposit of these taxes April 16 2 Assume that no deposit was made until April 30 Compute the following penalties Assume a 365 day year in your computations Round your answers to the nearest cent a Penalty for failure to make timely deposit $ b Penalty for failure to fully pay tax $ c Interest on taxes due and unpaid (assume a 4 interest rate) $ d Total penalty imposed $

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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

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%	$127,200	$7,886.40
Employee* and Employer HI:	1.45%	No limit	No maximum
Self-employed OASDI:	12.4%	$127,200	$15,772.80
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 3-6

Ned Fromton, an employer, files his employment tax return 20 days after the due date of the return. The amount of tax that was unpaid is $6,000. Fromton's penalty is:
	Failure to file (5% $6,000) = $300 Note: Any fraction of a month counts as a whole month.

Example 3-7

Yeld Company failed to pay its employment taxes of $5,000 for March (due April 16) until May 21. The failure to pay penalty assessed against Yeld Company is:

Failure to Pay Tax ($5,000 0.5% 2)	=	$50.00
Interest on Taxes Due ($5,000 0.04 35/365)	=	19.18
Total Penalty	=	$69.18

Note: In addition, a penalty for failure to make a timely deposit will also be assessed.

Vulcan Company is a monthly depositor whose tax liability for March 2018 is $2,710.

1. What is the due date for the deposit of these taxes? April 16

2. Assume that no deposit was made until April 30. Compute the following penalties. Assume a 365-day year in your computations. Round your answers to the nearest cent.

a.	Penalty for failure to make timely deposit.	$_________
b.	Penalty for failure to fully pay tax.	$_________
c.	Interest on taxes due and unpaid (assume a 4% interest rate).	$_________
d.	Total penalty imposed.	$_________