Question

An employee works 47 hours (47-40 overtime hours) during a workweek in October of 2020. the employee earns $46/hour, with his employer paying 1.5 times times regular rate of pay for overtime hours. to date, he has earned $140,550 during the present year. he has requested that his employer withhold 7% of gross pay which is to be contributed to a 401(k) plan.

Taxable income for federal income tax withholding=

taxable income for social security tax=

taxable income for Medicare tax=​

Answer 1

• Taxable income for federal income tax withholding is $2,160.39

• Taxable income for social security tax is $2,323

• Taxable income for Medicare tax is $2,323

a. Calculate to determine the Taxable income for federal income tax withholding

First step is to determine the Gross pay

Gross pay:

Normal 40 hrs ×$46/hour =$1,840              

Overtime (47 hours-40 hours)×$46/hour ×1.5=$483      

Total pay=$2,323

Now let determine the Taxable income for federal income tax withholding

Taxable income for federal income tax withholding=$2,323-(7%×$2,323)

Taxable income for federal income tax withholding=$2,323-$162.61

Taxable income for federal income tax withholding=$2,160.39

b. Calculation to determine the taxable income for social security tax

Taxable income for social security tax= (40 hrs ×$46/hour)+ [(47 hours-40 hours)×$46/hour ×1.5]

Taxable income for social security tax= (40 hrs ×$46/hour)+ (7 hours×$46/hour ×1.5)

Taxable income for social security tax=$1,840+$483        

Taxable income for social security tax=$2,323

c. Calculation to determine the taxable income for Medicare tax

Taxable income for Medicare tax= (40 hrs ×$46/hour)+ [(47 hours-40 hours)×$46/hour ×1.5]

Taxable income for Medicare tax=(40 hrs ×$46/hour)+ (7 hours×$46/hour ×1.5)

Taxable income for Medicare tax=$1,840 +$483      

Taxable income for Medicare tax=$2,323

Inconclusion:

• Taxable income for federal income tax withholding is $2,160.39

• Taxable income for social security tax is $2,323

• Taxable income for Medicare tax is $2,323

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