|
Employee and Employer OASDI:
|
6.20%
|
$118,500
|
$7,347
|
|
Employee* and Employer HI:
|
1.45%
|
No limit
|
No maximum
|
|
Self-employed OASDI:
|
12.4%
|
$118,500
|
$14,694
|
|
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.
1. On Friday, May 27, 2016, Rogers, Ltd., a semiweekly depositor, pays wages and accumulates employment taxes. Rogers makes a deposit on Wednesday, June 1, in the amount of $4,000. Later it was determined that Rogers was actually required to deposit $4,080 by Wednesday.
Rogers has a shortfall of $80. The shortfall is less than the greater of $100 or 2 percent of the amount required to be deposited. Therefore, Rogers satisfies the safe harbor rule so long as the $80 shortfall is deposited by Wednesday, July 13.
2. On Friday, October 7, 2016, Vargan Company, a semiweekly depositor, pays wages and accumulates employment taxes. Vargan makes a deposit of $30,000 but later finds that the amount of the deposit should have been $32,000.
The $2,000 shortfall ($32,000 - $30,000) exceeds the greater of $100 or 2 percent of the amount required to be deposited (2% × $32,000 = $640). Thus, the safe harbor rule was not met. As a result, Vargan is subject to a failure-to-deposit penalty, as described later in this chapter.
For Hamilton Company (EIN 00-0001462), semiweekly depositor, for the first quarter of 2016 follow. Hint: To calculate liability for each date, multiply gross wages by FICA rate [to get employer's share of FICA]. Then add employee's withholding OASDI, HI and FIT.
|
Semimonthly
Paydays
|
Gross and
Taxable Wages
|
FICA Withheld
OASDI
|
FICA Withheld
HI
|
Federal Income
Tax Withheld
|
|
1/15
|
$34,200
|
$2,120.40
|
$495.90
|
$4,180.00
|
|
1/29
|
32,900
|
2,039.80
|
477.05
|
4,090.00
|
|
2/15
|
31,750
|
1,968.50
|
460.38
|
3,996.00
|
|
2/29
|
28,970
|
1,796.14
|
420.07
|
3,797.00
|
|
3/15
|
28,800
|
1,785.60
|
417.60
|
3,790.00
|
|
3/31
|
29,400
|
1,822.80
|
426.30
|
3,999.00
|
| |
$186,020
|
$11,533.24
|
$2,697.30
|
$23,852.00
|
a. Complete Schedule B of Form 941 on page 3-65 for the first quarter for Harry Conway, the owner of Hamilton Company. If required, round your answers to nearest cent and use the rounded answers in subsequent computations. Round your final answers to the nearest cent. If a box does not require an amount, leave it blank.