Easy Stop has two employees in 2016. Catherine earns $4,500 per month and Jordan, the manager, earns $11,000 per month. Neither is paid extra if they work overtime. Assume the Social Security tax rate is 6 percent on the first $110,000 of earnings and the Medicare tax rate is 1.5 percent on all earnings. The federal income tax withholding is 15 percent of gross earnings for Catherine and 20 percent for Jordan. Both Catherine and Jordan have been employed all year.
a. Calculate the net pay for both Catherine and Jordan for March.
b. Calculate the net pay for both Catherine and Jordan for December.
c. Is the net pay the same in March and December for both employees? Why or why not?
d. What amounts will Easy Stop report on the 2016 W-2s for each employee?