Problem Information Use the following tax rates, ceiling, and maximum taxes: Employee and Employer OASDI: 6.20% $160,200 $9,932.40 Employee and Employer HI: 1.45% No limit No maximum Self-employed OASDI: 12.4% $160,200 $19,864.80 Self-employed HI: 2.9% No limit No maximum *Employee HI: Plus an additional 0.9% on wages over $200,000. Also applicable to self-employed. Rounding Rules: Unless instructed otherwise compute hourly rate and overtime rates as follows: 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 overtime 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, drop the third decimal place. Also, use the minimum hourly wage of $7.25 in solving these problems and all that follow. Ralston is the sole proprietor of Cut & Curl. During the year, his net earnings were $79,700. What are his self-employment taxes (OASDI and HI) on these earnings? Round your answer to the nearest cent.
Problem Information Use the following tax rates, ceiling, and maximum taxes: Employee and Employer OASDI: 6.20% $160,200 $9,932.40 Employee and Employer HI: 1.45% No limit No maximum Self-employed OASDI: 12.4% $160,200 $19,864.80 Self-employed HI: 2.9% No limit No maximum *Employee HI: Plus an additional 0.9% on wages over $200,000. Also applicable to self-employed. Rounding Rules: Unless instructed otherwise compute hourly rate and overtime rates as follows: 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 overtime 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, drop the third decimal place. Also, use the minimum hourly wage of $7.25 in solving these problems and all that follow. Ralston is the sole proprietor of Cut & Curl. During the year, his net earnings were $79,700. What are his self-employment taxes (OASDI and HI) on these earnings? Round your answer to the nearest cent.
Chapter9: Payroll, Estimated Payments, And Retirement Plans
Section: Chapter Questions
Problem 16MCQ
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Transcribed Image Text:Problem Information
Use the following tax rates, ceiling, and maximum taxes:
Employee and Employer OASDI:
6.20%
$160,200
$9,932.40
Employee and Employer HI:
1.45%
No limit
No maximum
Self-employed OASDI:
12.4%
$160,200
$19,864.80
Self-employed HI:
2.9%
No limit
No maximum
*Employee HI: Plus an additional 0.9% on wages over $200,000. Also applicable to self-employed.
Rounding Rules: Unless instructed otherwise compute hourly rate and overtime rates as follows:
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 overtime 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, drop the third decimal place.
Also, use the minimum hourly wage of $7.25 in solving these problems and all that follow.
Ralston is the sole proprietor of Cut & Curl. During the year, his net earnings were $79,700. What are his self-employment taxes (OASDI and HI) on these earnings?
Round your answer to the nearest cent.
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