Wages & Salaries
Define gross earnings.
The total amount earned.
What is a piecework rate?
Pays an employee a given amount per item.
What is social security?
Requires all employees, employers, and self-employed individuals to make regular contributions from wages and self-employment income. It generated monthly benefits for retired workers, spouses of retired workers, and disabled workers.
The income taxes withheld from a paycheck are based on what?
The martial status and the number of withholding allowances claimed on the W-4 form filed with the employer.
Name two common pay periods. (+50 points if you can name how many paychecks per year for each pay period you name)
Monthly (12), semimonthly (24), biweekly (26), and weekly (52).
How do you find gross earnings for an hourly wage employee?
Gross Earnings = Number of hours worked x Rate per hour
What is the idea/reason behind paying employees a commission rate?
The idea is to motivate salespeople by paying them on the basis of actual results (sales).
Why was medicare established?
To help those 65 and over, as well as younger people with disabilities, pay medical expenses.
Name one method used to determine the amount of federal withholding tax to deduct from paychecks.
Wage bracket method or Percentage method.
Is there a maximum amount that you pay into medicare?
No, you pay medicare tax on every paycheck regardless of how much you have made in that year.
Describe the Fair Labor Standards Act?
Sets a minimum wage and states that an overtime wage be paid for all hours worked over 40 hours per week. This law covers most full-time employees.
Given an example of a job that works based off of salary plus commission and why would someone want to have salary plus commission over just commission alone?
Car salesman, Realtors, etc.
Salary plus commission offers a guaranteed income to cover basic living costs while providing an incentive to sell more.
An employee is paid a salary of $11,050 per month. If the current FICA rate is 6.2% on the first $130,000 of earnings, and the Medicare tax rate is 1.45% of all earnings, how much should be withheld for (a) FICA tax and (b) Medicare tax during the following month?
March: a) ____________ b) ________________
a) $685.10
b) $160.23
Calculate the total amount owed to the IRS from Starbucks. FICA tax collected from employees $265.36, medicare tax collected from employees $61.24, and total federal withholding tax $4,111.68.
$4,764.88
Does state income tax vary across states?
Yes!
Jessica Parker is a sales associate at JC Penny and is paid $13.60 per hour for regular time and time and a half for all hours over 40 worked in a week. Find her gross earnings for a week in which she worked 52 hours.
$788.80
At Justin's Electronics, assemblers are paid according to the following differential piece rate scale: 1-20 units in a day, $4.50 each; 21-30 units, $5.50 each; and $7 each for every unit over 30. Adrian Ortega assembled 70 units in one week. Find his gross pay.
$425
Martin Rodriguez works in sales for FedEx and is paid $675 per week plus a commission of 2% on sales. His sales last week were $17,240. Find the amount of (a) his Social Security tax, (b) his Medicare tax, and (c) his state disability insurance deduction for the pay period. (Assume the SDI rate is 1% and that earnings will not exceed $31,800).
a) $63.23
b) $14.79
c) $10.20
Find the federal withholding tax using the wage bracket method for the following employee.
Alex: 2 withholding allowances, married, $642.30 weekly earnings
$32
What act created Social Security?
The federal insurance contributions act (FICA).
Hannah worked 47.5 hours and her regular rate is $12.48. Find the total gross earnings for Hannah. Time and a half is paid on all hours over 40 in one week.
$639.60
Winston receives a commission of 6% for selling a $235,500 house. One-half of the commission goes to the broker and one-half of the remainder to another salesperson. Winston gets the rest. Find the amount he receives.
$3,532.50
Nina Fitzgerald earned $127,375.60 so far this year. This week she earned $2,649.78. Find her FICA tax & Medicare tax for this week's earnings (add these tax deductions together and assume a $130,000 maximum for Social Security).
$201.13
Camdyn Jackson, district manager for Starbucks, has earnings of $1147 in one week of March. She is single and claims four withholding allowances. Her deductions include FICA, Medicare, federal withholding, state disability insurance, state withholding (assume 3.4%), a United Way contribution of $15, and a savings bond of $100. Find her net pay for the week and use the percentage method for the federal withholding tax.
$777.04
The employees of Quick-Lube paid a total of $837.12 in Social Security tax last month, $195.78 in Medicare tax, and $1,217.34 in federal withholding tax. Find the total amount that the employer must send to the Internal Revenue Service.
$3,283.14