PR 11-3B Wage and tax statement data and employer FICA tax
Diamond Industries, Inc., began business on January 2, 2011. Salaries were paid to employees on the last day of each month, and social security tax, Medicare tax, and federal income tax were withheld in the required amounts. An employee who is hired in the middle of the month receives half the monthly salary for that month. All required payroll tax reports were filed, and the correct amount of payroll taxes was remitted by the company for the calendar year. Early in 2012, before the Wage and Tax Statements
(Form W-2) could be prepared for distribution to employees and for filing with the Social Security Administration, the employees’ earnings records were inadvertently destroyed.
None of the employees resigned or were discharged during the year, and there were no changes in salary rates. The social security tax was withheld at the rate of 6.0% and Medicare tax at the rate of 1.5% on salary. Data on dates of employment, salary rates, and employees’ income taxes withheld, which are summarized as follows, were obtained from personnel records and payroll records:
Employee
Date First
Employed
Monthly
Salary
Monthly
Income Tax
Withheld
Beltran Jan. 1 $ 4,300 $ 681
Jeter Apr. 16 11,000 2,508
Lee Aug. 1 7,800 1,612
Rodriguez Nov. 16 3,000 356
Santana Mar. 1 6,120 1,145
Ramirez May 16 3,840 566
Ordonez Dec. 1 4,000 606
Instructions
1. Calculate the amounts to be reported on each employee’s Wage and Tax Statement (Form W-2) for 2011, arranging the data in the following form:
Employee
Gross
Earnings
Federal Income
Tax Withheld
Social Security
Tax Withheld
Medicare
Tax Withheld
2. Calculate the following employer payroll taxes for the year: (a) social security; (b) Medicare; (c) state unemployment compensation at 4.4% on the first $9,000 of each employee’s earnings; (d) federal unemployment compensation at 0.8% on the first $9,000 of each employee’s earnings; (e) total.
Answer:
1.
Gross Federal Income Social Security Medicare
Employee Earnings* Tax Withheld Tax Withheld Tax Withheld
Beltran $51,600 $ 8,172 $ 3,096.00 $ 774.00
Jeter 93,500 21,318 5,610.00 1,402.50
Lee 39,000 8,060 2,340.00 585.00
Rodriguez 4,500 534 270.00 67.50
Santana 61,200 11,450 3,672.00 918.00
Ramirez 28,800 4,245 1,728.00 432.00
Ordonez 4,000 606 240.00 60.00
$16,956.00 $4,239.00
*The gross earnings are determined by multiplying the monthly earnings by the
number of months of employment based on the date of hire.
2. a. Social security tax paid by employer...................................... $16,956.00
b. Medicare tax paid by employer ............................................... 4,239.00
c. Earnings subject to unemployment compensation tax,
$9,000 for all employees except Rodriguez and Ordonez.
Thus, total earnings subject to SUTA and FUTA are
$53,500 [(5 × $9,000) + $4,500 + $4,000].
State unemployment compensation tax: $53,500 × 4.4%...... 2,354.00
d. Federal unemployment compensation tax: $53,500 × 0.8%.. 428.00
e. Total payroll tax expense......................................................... $23,977.00
(Form W-2) could be prepared for distribution to employees and for filing with the Social Security Administration, the employees’ earnings records were inadvertently destroyed.
None of the employees resigned or were discharged during the year, and there were no changes in salary rates. The social security tax was withheld at the rate of 6.0% and Medicare tax at the rate of 1.5% on salary. Data on dates of employment, salary rates, and employees’ income taxes withheld, which are summarized as follows, were obtained from personnel records and payroll records:
Employee
Date First
Employed
Monthly
Salary
Monthly
Income Tax
Withheld
Beltran Jan. 1 $ 4,300 $ 681
Jeter Apr. 16 11,000 2,508
Lee Aug. 1 7,800 1,612
Rodriguez Nov. 16 3,000 356
Santana Mar. 1 6,120 1,145
Ramirez May 16 3,840 566
Ordonez Dec. 1 4,000 606
Instructions
1. Calculate the amounts to be reported on each employee’s Wage and Tax Statement (Form W-2) for 2011, arranging the data in the following form:
Employee
Gross
Earnings
Federal Income
Tax Withheld
Social Security
Tax Withheld
Medicare
Tax Withheld
2. Calculate the following employer payroll taxes for the year: (a) social security; (b) Medicare; (c) state unemployment compensation at 4.4% on the first $9,000 of each employee’s earnings; (d) federal unemployment compensation at 0.8% on the first $9,000 of each employee’s earnings; (e) total.
Answer:
1.
Gross Federal Income Social Security Medicare
Employee Earnings* Tax Withheld Tax Withheld Tax Withheld
Beltran $51,600 $ 8,172 $ 3,096.00 $ 774.00
Jeter 93,500 21,318 5,610.00 1,402.50
Lee 39,000 8,060 2,340.00 585.00
Rodriguez 4,500 534 270.00 67.50
Santana 61,200 11,450 3,672.00 918.00
Ramirez 28,800 4,245 1,728.00 432.00
Ordonez 4,000 606 240.00 60.00
$16,956.00 $4,239.00
*The gross earnings are determined by multiplying the monthly earnings by the
number of months of employment based on the date of hire.
2. a. Social security tax paid by employer...................................... $16,956.00
b. Medicare tax paid by employer ............................................... 4,239.00
c. Earnings subject to unemployment compensation tax,
$9,000 for all employees except Rodriguez and Ordonez.
Thus, total earnings subject to SUTA and FUTA are
$53,500 [(5 × $9,000) + $4,500 + $4,000].
State unemployment compensation tax: $53,500 × 4.4%...... 2,354.00
d. Federal unemployment compensation tax: $53,500 × 0.8%.. 428.00
e. Total payroll tax expense......................................................... $23,977.00
