Rock Adventures has 15 employees each working 40 hours per week and earning $30 an hour. Federal income taxes are withheld at 15% and state income taxes at 6%. FICA taxes are 7.65% and unemployment taxes are 3.8% of the first $7,000 earned per employee. What is the employer's total payroll tax expense for the first week of January?

$2,061

Explanation:

DATA:

Number of employees = 15 employees

Number of hours worked = 40 hours

Earning per hour = $30

Tax Rate = 15%

Unemployment tax rate = 3.8%

FICA tax rate = 7.65%

Solution

Employer's total payroll tax expense can be calculated by adding the FICA tax and unemployment tax from the employee's Basic pay.

Calculation

Basic Pay (15x40x30)                            = $18,000

FICA (18,000 x 7.65%)                            = $1,377

Unemployment tax ( 18,000 x 3.8%)     = $684

Employer's total payroll tax expense    = $2,061

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