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%	$128,400	$7,960.80
Employee* and Employer HI:	1.45%	No limit	No maximum
Self-employed OASDI:	12.4%	$128,400	$15,921.60
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 1, his gross pay was $800 (three days working, one paid vacation day, and one paid sick day). He also reported to his employer tips of $1,080 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 ($800) deducted each week (salary reduction). Carmel Dinner Club also provides a matching contribution ($40) into the plan for Gorman. Compute the following amounts:

a. Deduction for OASDI tax	$
b. Deduction for HI tax	$