What are the federal employment tax rates and wage bases for 2007?
The three components of federal employment taxes include Social Security, Medicare, and FUTA. Social Security: The effective tax rate is 12.4 percent of an employee’s wages up to the 2008 Social Security wage base of $102,000. Both the employer and the employee are responsible for paying 6.2 percent of the Social Security employment tax up to the 2007 wage base. Example 1: For an employee with no prior wages who earns $1,000 during the payroll period, the Social Security withholding from gross pay will equal $62.00 ($1,000 x 6.2%) and the employer portion of Social Security employment tax will equal $62.00 ($1,000 x 6.2%) for a total combined tax due of $124.00. Example 2: For an employee with 2007 year-to-date wages of $96,900 who earns $1,000 during the payroll period, this employee will reach the 2007 Social Security wage base during the period. Therfore the amount subject to Social Security tax is reduced from $1,000 to $600 ($97,500 minus $96,900 equals $600), resulting in both an
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- What are the federal employment tax rates and wage bases for 2007?
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