[Anonymous]

Why is it 7% instead of 14%? I thought the employer pays both the employee and employer parts?

or the week ended June 30, 20X1, Free Co. paid gross wages of $20,000, from which federal income taxes of $2,500 and FICA were withheld. All wages paid were subject to FICA tax rates of 7% each for employer and employee. Free makes all payroll-related disbursements from a special payroll checking account. What amount should Free have deposited in the payroll checking account to cover net payroll and related payroll taxes for the week ended June 30, 20X1?

A. $21,400

B. $22,800

C. $23,900

D. $25,300

The deposit should include:

The $20,000 of gross wages $20,000

The 7% employee taxes (7% of $20,000) 1,400

---

Total $21,400

=======

The $20,000 of gross wages already includes the amount of federal income taxes and employee-paid FICA taxes withheld. The employee actually receives the net amount.

[Anonymous]

The employer is only responsible for their portion of FICA which is only 7% . The other 7% is deducted from the salary of the employee.

[Author]

Replies