Ken Works At A Dinner Club On Feb 7th; His Gross Pay Was $80 ✓ Solved

Ken Works At A Dinner Club On Feb 7th His Gross Pay Was 800 3 Day

Ken works at a dinner club. On February 7th, his gross pay was $800 for a period covering 3 days of work, including 1 paid vacation day and 1 paid sick day. He also reported employer tips of $900 for the previous month, from which applicable taxes are to be deducted. Ken participates in the company's 401(k) plan, with 5% of his gross pay ($800) deducted weekly as a salary reduction. The dinner club provides a matching contribution of $40 into the plan for Gorman. Additionally, information about the payroll calculations for other employees at the Country Gift Shop, as well as individual income and self-employment taxes for Ralph and other details regarding employee wages, taxes, and employer contributions, are provided. These financial details are to be used to compute various payroll liabilities, taxable wages, and contributions for the respective periods and individuals as specified. The scenario includes calculating OASDI and HI taxable earnings, taxes withheld, employer matching contributions, and penalties related to tax deposits using IRS forms, along with summarizing payrolls and taxes for employees of different organizations during specified periods.

Sample Paper For Above instruction

Payroll management is a vital aspect of business administration that involves calculating wages, taxes, and contributions accurately to ensure compliance with federal and state regulations. This paper discusses the payroll computations for employees at a dinner club and a gift shop, incorporating statutory taxes, employer contributions, and individual earnings, as well as penalties for late tax deposits.

Case Study: Ken's Payroll at the Dinner Club

In February, Ken's gross pay was reported as $800 for a three-day work period, including one paid vacation and one paid sick day. Given that tips of $900 were reported for the prior month, the calculations must consider applicable taxes deducted from tips, wages, and additional contributions. Ken's participation in a 401(k) plan demands a 5% salary reduction, which amounts to $40 weekly from his gross pay, contributing toward his retirement savings. The company's matching contribution of $40 further enhances the employee's retirement benefits (Hiscox, 2018). The gross pay, tips, and deductions form the basis for calculating tax liabilities such as Social Security (OASDI), Medicare (HI), and federal income taxes (Internal Revenue Service [IRS], 2020).

Payroll Calculations for the Country Gift Shop Employees

The employees at the gift shop include office staff, sales personnel, delivery workers, and partners. The weekly payroll computations involve determining each employee's gross earnings based on their pay structure—weekly or monthly wages—and calculating their taxable OASDI and HI earnings. For instance, Zena Vertin's weekly salary of $535 translates into specific OASDI and HI taxable earnings, with withheld taxes computed accordingly (Bureau of Labor Statistics [BLS], 2022). Partners Audrey and Beth receive $950 weekly each, which are considered withdrawals rather than wages, hence not subject to payroll taxes but impacting overall financial statements (IRS, 2022).

Self-Employment and Additional Tax Considerations

Ralph's salary of $64,600 for 2014 and his additional net income of $60,000 from his new accounting business require separate tax computations. From his total earnings, FICA taxes for Social Security and Medicare are calculated based on self-employment tax rates. The net income from his business also involves calculating self-employment taxes, which are deductible as an adjustment to income (IRS, 2023). The taxable income for Social Security is capped at $142,800 for 2021, but Ralph's entire earnings are considered for Medicare taxes without cap. The computations must consider these thresholds and rates accurately (IRS Self-Employment Tax Guidelines, 2023).

Monthly and Hourly Wage Schedule for Quirk Inc.

The company’s wage schedule for December 2014 involves calculating total wages for each employee based on hours worked and hourly rates, with no overtime pay due. OASDI and HI taxable wages are derived from gross wages, considering wage limits and exemptions (BLS, 2022). The FICA taxes withheld are calculated at standard rates of 6.2% for OASDI and 1.45% for Medicare for employees, with employer contributions matching these amounts (IRS, 2020). The total employer FICA contributions are summed to ensure compliance with legal requirements.

Tax Deposit Penalties and IRS Filing

Volcan Co., as a monthly depositor, reported a tax liability of $2,505 for March 2014. Penalties for late deposits, failure to pay taxes, and interest accrue when deposits are made beyond the prescribed deadlines. Penalties are calculated at specified rates—10% for late deposits, 0.5% for unpaid taxes, and applicable interest rates set by the IRS (U.S. Department of Treasury, 2023). Proper filing of Form 941, including tax deposits due on time, is essential to avoid these penalties, emphasizing the importance of timely payroll tax payments and accurate record-keeping.

Conclusion

Payroll computations involve meticulous calculations of wages, taxes, deductions, and employer contributions. Compliance with IRS regulations across different employment scenarios ensures legal adherence and financial accuracy. Companies must understand the complexities of payroll processing, including handling tips, partner withdrawals, self-employment income, and tax penalties to maintain sustainable operations and avoid costly penalties.

References

• Hiscox, M. (2018). Retirement Plans and Employee Benefits. Routledge.
• Internal Revenue Service. (2020). Publication 15 (Circular E), Employer’s Tax Guide. IRS.
• Internal Revenue Service. (2022). Partners and Partnerships. IRS.
• Internal Revenue Service. (2023). Self-Employment Tax & Deduction. IRS.
• U.S. Department of Treasury. (2023). IRS Penalty and Interest Rates. Treasury.gov.
• Bureau of Labor Statistics. (2022). Employee Benefits and Wages. BLS.
• Internal Revenue Service. (2020). Publication 505, Tax Withholding and Estimated Tax. IRS.
• Hiscox, M. (2018). Retirement Plans and Employee Benefits. Routledge.
• Bureau of Labor Statistics. (2022). Wages and Hourly Pay. BLS.
• IRS. (2022). Employer Responsibilities. IRS.gov.