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 Social Security Annual Payroll Tax Formula
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## Social Security Annual Payroll Tax Formula

#1
March 18th 07, 04:59 PM posted to microsoft.public.excel.misc
 Toppers external usenet poster Posts: 4,340
Social Security Annual Payroll Tax Formula

=min(a1,94000)*0.0765

OR

=min(a1,94000)*B1

Where b1 is formatted as % with 7.65

"Jen" wrote:

> Hello-
>
> I am in need of some help, which may be as simple as an IF function, but I
> hard.
>
> I am putting together a budget for a fictitious start-up company for class
> and need to account for any social security taxes paid from an employer
> perspective. The rate is 7.65%, however, I want this formula to take 7.65%
> of UP TO 94,000. Anything over the 94,000 is no longer taxed. So an
> employee that I have budgeted to make \$120,000 for the year will only have
> SS taxes paid up to \$94,000 of that \$120,000 amount (\$94,000 x 7.65% =
> \$7,191).
>
> How would I write this formula in excel? I have 750 employees and
> approximately 25 make over the \$94,000 limit.
>
> Jennifer
>
>
>

#2
March 18th 07, 05:08 PM posted to microsoft.public.excel.misc
 Jen[_2_] external usenet poster Posts: 1
Social Security Annual Payroll Tax Formula

Hello-

I am in need of some help, which may be as simple as an IF function, but I
hard.

I am putting together a budget for a fictitious start-up company for class
and need to account for any social security taxes paid from an employer
perspective. The rate is 7.65%, however, I want this formula to take 7.65%
of UP TO 94,000. Anything over the 94,000 is no longer taxed. So an
employee that I have budgeted to make \$120,000 for the year will only have
SS taxes paid up to \$94,000 of that \$120,000 amount (\$94,000 x 7.65% =
\$7,191).

How would I write this formula in excel? I have 750 employees and
approximately 25 make over the \$94,000 limit.

Jennifer

#3
March 18th 07, 05:17 PM posted to microsoft.public.excel.misc
 Gord Dibben external usenet poster Posts: 22,911
Social Security Annual Payroll Tax Formula

One method.

=IF(A1>94000,94000*0.0765,A1*0.0765)

Gord Dibben MS Excel MVP

On Sun, 18 Mar 2007 12:08:30 -0500, "Jen" > wrote:

>Hello-
>
>I am in need of some help, which may be as simple as an IF function, but I
>hard.
>
>I am putting together a budget for a fictitious start-up company for class
>and need to account for any social security taxes paid from an employer
>perspective. The rate is 7.65%, however, I want this formula to take 7.65%
>of UP TO 94,000. Anything over the 94,000 is no longer taxed. So an
>employee that I have budgeted to make \$120,000 for the year will only have
>SS taxes paid up to \$94,000 of that \$120,000 amount (\$94,000 x 7.65% =
>\$7,191).
>
>How would I write this formula in excel? I have 750 employees and
>approximately 25 make over the \$94,000 limit.
>
>Jennifer
>

#4
March 18th 07, 05:20 PM posted to microsoft.public.excel.misc
 joeu2004 external usenet poster Posts: 2,061
Social Security Annual Payroll Tax Formula

On Mar 18, 9:08 am, "Jen" > wrote:
> I am putting together a budget for a fictitious start-up company for class
> and need to account for any social security taxes paid from an employer
> perspective. The rate is 7.65%, however, I want this formula to take 7.65%
> of UP TO 94,000. [....] How would I write this formula in excel?

Well, if your facts were correct -- they are not, but perhaps those
are the facts that your instructor wants you to work with -- you could
write:

=round(7.65%*max(94000,A1), 2)

where A1 is the employee's cumulative wages subject to FICA tax. If
you want a formula that works for each pay period, you could write:

=if(A1 > 94000, 0, round(7.65%*A2, 2))

where A2 is the employee's periodic wages subject to FICA tax.

A couple of details that you may or may not want to take into account,
depending on the assignment....

1. At best, that is FICA tax from the __employee's__ perspective, not
the employer's. That is, it is the amount withheld from the
employee's wages. From the __employer's__ point of view, FICA is paid
at the rate of 15.3% -- applying the same over-simplification that you
are. Typically, this is accomplished by taking half from the
employee's wages and contributing half from the employer's cash.

2. Actually, FICA tax is composed of two taxes: Soc Sec and
Medicare. It is only Soc Sec that is limited. Medicare tax at 2.9%
(1.45% from the employee) is assessed on all wages subject to Medicare
tax. Soc Sec tax at 12.4% (6.2% from the employee) is assessed on the
first \$94,200 (in 2006; or \$97,500 in 2007) of each employee's wages
subject to Soc Sec tax.

Taking #2 into account, the total FICA tax is one of the following
(see the above choices), reverting to the incorrect Soc Sec limit that
you mentioned:

=round(1.45%*A1, 2) + round(6.2%*max(94000,A1), 2)

=round(1.45%*A2, 2) + if(A1 > 94000, 0, round(6.2%*A2, 2))

#5
March 18th 07, 05:21 PM posted to microsoft.public.excel.misc
 joeu2004 external usenet poster Posts: 2,061
Social Security Annual Payroll Tax Formula

Errata....

On Mar 18, 9:20 am, "joeu2004" > wrote:
> =round(7.65%*max(94000,A1), 2)
> [....]
> =round(1.45%*A1, 2) + round(6.2%*max(94000,A1), 2)

Arrgghh! Of course, that should MIN(...), not MAX(...).

#6
March 18th 07, 10:09 PM posted to microsoft.public.excel.misc
 joeu2004 external usenet poster Posts: 2,061
Social Security Annual Payroll Tax Formula

On Mar 18, 9:20 am, "joeu2004" > wrote:
> 1. At best, that is FICA tax from the __employee's__ perspective, not
> the employer's. That is, it is the amount withheld from the
> employee's wages. From the __employer's__ point of view, FICA is paid
> at the rate of 15.3% -- applying the same over-simplification that you
> are. Typically, this is accomplished by taking half from the
> employee's wages and contributing half from the employer's cash.

In email, Jennifer points out that my point above is a bit of a
nitpick. After all, isn't "half" of 15.3% simply 7.65%?
(Rhetorical.) Technically, not exactly, if only due to rounding the
employee's deduction to a penny. But I probably should not have
mentioned it all. It's a "hot button" for me recently because of an
issue I have been having with someone who wants to bend the IRS rules
nothing. Mea culpa!

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