The problem refer to self-employed individuals. These people pay a Social Security tax of 12.4% and Medicare tax of 2.9%. Find both of the taxes on the following annual adjusted earnings.
Ron Morris, a Chic-Filet franchise owner, earned $78,007.14.
First, lets see the formula to calculate the social security tax and Medicare tax:
Gross earnings = $78,007.14
Rate of FICA = 0.124
Rate of medicare = 0.029
Some companies use the overtime premium method to determine gross earnings. Use this method to complete the payroll ledger. Overtime is paid at the time-and-a-half rate for all hours over 40.
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