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 3-1 Ken Gorman is a maitre d' at Carmel Dinner Club. On February 2, his gross pay was $880 (three days working, one paid vacation day, and one paid sick day). He also reported to his employer tips of $920 for the previous month (applicable taxes to be deducted out of this pay). Gorman belongs to the company's 401(k) plan and has 5% of his gross pay ($880) deducted each week (salary reduction). Carmel Dinner Club also provides a matching contribution ($44) into the plan for Gorman. Compute the following amounts: a. Deduction for OASDI tax $________ b. Deduction for HI tax $_________