Computing payroll amounts considering Social Security tax ceilings [10 min]
Suppose you work for MRK, the accounting firm, all year and earn a monthly salary
of $5,700. There is no overtime pay. Your withheld income taxes consume 15% of
gross pay. In addition to payroll taxes, you elect to contribute 5% monthly to your
retirement plan. MRK also deducts $150 monthly for your co-pay of the health
insurance premium.
Requirement
1. Compute your net pay for November. Use 7.65% FICA tax rate and assume the
2010 FICA wage ceiling of $106,800 applies
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