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Note: In this chapter and in all succeeding work throughout the course, unless instructed otherwise, use the following rates, ceiling, and maximum taxes.

Employee and Employer OASDI:	6.20%	$127,200	$7,886.40
Employee* and Employer HI:	1.45%	No limit	No maximum
Self-employed OASDI:	12.4%	$127,200	$15,772.80
Self-employed HI:	2.9%	No limit	No maximum

1.	Carry the hourly rate and the overtime rate to 3 decimal places and then round off to 2 decimal places (round the hourly rate to 2 decimal places before multiplying by one and one-half to determine the over-time rate).
2.	If the third decimal place is 5 or more, round to the next higher cent.
3.	If the third decimal place is less than 5, simply drop the third decimal place.
	Examples:	Monthly rate $1,827 Weekly rate ($1,827 12)/52 = $421.615 rounded to $421.62 Hourly rate $421.62/40 = $10.540 rounded to $10.54 O.T. rate $10.54 1.5 = $15.81

Also, use the minimum hourly wage of $7.25 in solving these problems and all that follow.

*Employee HI: Plus an additional 0.9% on wages over $200,000. Also applicable to self-employed.

Example 3-1

Ernie Gilmore began working as a part-time waiter on June 1, 2018, at Sporthouse Restaurant. The cash tips of $490 that he received during June were reported on Form 4070, which he submitted to his employer on July 4. During July, he was paid wages of $570 by the restaurant.

Compute the following amounts. Round your answers to the nearest cent.

	OASDI	HI
a. The amount of FICA taxes that the employer should withhold from Gilmore's wages during July.	$______	$_______
b. The amount of the employer's FICA taxes on Gilmore's wages and tips during July.	$_________	$_________

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