FICA tax calculation with wage cap

EHC

New Member
Joined
Jul 26, 2010
Messages
2
Good afternoon,

First time poster and would appreciate some guidance on this topic.

I have to calculate the FICA tax liability for an institution. I have the salary information for all the employees. I need to figure this out on a monthly basis. The issue is that FICA is calculated using two separate rates. The first $106,800 is taxed at 7.65% and the remaining income is taxed at 1.45%. So just for illustration purpose, lets say the person makes $50,000 per month.

The first two months of income will be taxed at 7.65% but then in the third month, some of the income (up to $106,800 cumulatively) will be taxed at 7.65% and the remainder of the income in the third month (and going forward since they hit the $106,800 cap) will be taxed at 1.45%.

Is there a way to set up a formula for this? My issue, in this illustration, is that in the third month i can either tax it at one of the two rates and not a portion of the income at one rate and the other portion at the other rate.

Thanks!
 

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dave3009

Well-known Member
Joined
Jun 23, 2006
Messages
7,025
Office Version
  1. 365
  2. 2016
Hi and Welcome

Something like this?
Excel Workbook
ABC
1MonthPaymentTax
21500003825
32500007650
43500008796.6
54500009521.6
Sheet3
Excel 2007
Cell Formulas
RangeFormula
C2=IF(SUM($B$2:B2)<106800, SUM($B$2:B2)*0.0765, (106800*0.0765)+(SUM($B$2:B2)-106800)*0.0145)
 

JoeMo

MrExcel MVP
Joined
May 26, 2009
Messages
17,913
Office Version
  1. 365
  2. 2010
Platform
  1. Windows

EHC

New Member
Joined
Jul 26, 2010
Messages
2
Thanks for the help guys. JoeMo, i think you showed what i'm looking for. I'm going to give it a try, but it looks good. Thanks to both of you!
 
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