Panola Co. employed Jan Rao in 2013. Jan earned $5,200 per month and worked the entire year. Assume the Social Security tax rate is 6 percent on the first $110,000 of earnings and the Medicare tax rate is 1.5 percent. Jan’s federal income tax withholding amount is $800 per month. Use 6.2 percent for the unemployment tax rate for the first $7,000 of earnings per employee.
a. Answer the following questions:
(1) What is Jan’s net pay per month?
(2) What amount does Jan pay monthly in FICA payroll taxes?
(3) What is the total payroll tax expense for Panola Co. for January 2013? February 2013?
March 2013? December 2013?
b. Assume that instead of $5,200 per month Jan earned $10,000 per month. Answer the questions in Requirement a.