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 3-4

George Talbot receives wages amounting to $102,200. 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 SelfEmployment Income
$127,200		$102,200	=	$25,000

Ralph Henwood was paid a salary of $84,600 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 $64,500 on his income tax return for 20--. Compute the following:

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	$__________