For each employee, first calculate gross pay. Then determine taxable income used to calculate federal income tax withholding, Social Security tax, and Medicare tax.
NOTE: For simplicity, all calculations throughout this exercise, both intermediate and final, should be rounded to two decimal places at each calculation.
1:
An employee works 45 hours (45 – 40 were overtime hours) during a workweek in October of 2017. The employee earns $45/hour, with his employer paying 1.5 times the regular rate of pay for overtime hours. To date, he has earned $130,050 during the present year. He has requested that his employer withhold 8% of gross pay, which is to be contributed to a 401(k) plan.