 In this presentation we will calculate OASTI or Social Security. We're currently here on the payroll register. What we see on the payroll register so far is our two employees. We've gotten to the total earnings here. Support a counting instruction by clicking the link below giving you a free month membership to all of the content on our website broken out by category broken out by course. Each course then organized in a logical reasonable fashion making it much more easy to find what you need than can be done on a YouTube page. We also include added resources such as Excel practice problems, PDF files and more like QuickBooks backup files when applicable. So once again click the link below for a free month membership to our website and all the content on it. And now we're ready to take a look at the OASTI. So these are going to be the two employees. I'm going to scroll back over. We can't see the names Bill and Pam, but we'll scroll this over here so we can concentrate on where we need to concentrate. So we've got the total earnings for our two employees. We need to know what the OASTI wages are, which is normally the same, but could differ if someone hits this cap, which we're saying for this problem is 128 400 that will probably that goes up typically from year to year. But if we know the cap, the concept will be the same. So what we need to do is is know did anyone hit the cap, looking at these two numbers you say well no no one hit the cap there and there's that's way less than here. But obviously what we're doing here is trying to figure out did they hit the cap up to this point in time. This only shows one pay period. And so what we need to do this is pay period 40 is go through their registers and say okay where are they at from year to date, how much have they earned year to date. That's how we need to determine if they have or not hit the cap to do that. We'll go to the earnings records. We're going to go to the earnings records tab and we're going to scroll all the way up to the top and I'm looking for this is Bill Smith. Now it doesn't look like they're going to have a problem here based on the income for Bill. So if we scroll back down to the end of this we're at pay period before pay period 40 before we do this, not anywhere near total earnings or social security earnings, nowhere near the cap. So we look good there. If we keep scrolling back down to now we're on Judy by the way or Pam and we scroll back down we see that we could have a problem here and this is where we're actually going to have. So we need to make sure that we're before this calculation before the week that we're in. If we look at the total it adds up to 125, 535. So the question then is is the difference to bring us up to where we need to be or to the cap of 128, 400 minus the 125, 535 that's 2008, 65. That's less than if that is less than the OASDI wages which it typically is because it's being 3,118 then we need to use the lesser of the two and if we use that 2,865 it'll get us up to the cap and we cannot go beyond the cap. That will be the point. So for her we're going to use this 2,865 rather than the normal wages. So if we go back over here we know that this is the one we really got to watch out for because that's the big earner here and that's going to be at 2865 and note again you can't really tell on the payroll register that's why you need to link it to the earnings report and if we don't do that we'll end up paying too much social security. So when it gets to bill is not going to be a problem to hit that cap there could be a difference however between the total earnings and the OASDI as well in terms of the if there's a cafeteria plan and for this problem we're going to say it's 250 for the cafeteria plan so we're going to say this equals the total earnings minus the 250 for the cafeteria plan so that's going to be their wages if we sum this up then total SUM and we sum that up we're going to get 3,371.50 okay so then we're going to calculate the taxes on it now I'm going to do it over here because sometimes it's helpful to see it vertically this is how I would we would punch into a calculator this is how you probably want to do it in a problem have a vertical calculation so I'm going to calculate the employer and employee portion just so we can get an idea of the fact that there isn't an employer and employee portion so what we're going to do is we're going to take the wages and I'm going to take the total this time as well and that's want to emphasize the fact that because it's a flat tax rate we can take the total and or we can take the sum of the taxes for the individuals that's the nice thing the beauty of a flat tax so we're going to take this total I'll just say equals that total and then we'll multiply it times the rate which is 6.2 percent or 0.062 6.2 percent then we'll multiply that out so I'm going to bring this over to the outside column equals this total times the 6.2 percent gives us the 209.03 and then we'll do the same thing for the employer portion note the employer is going to have to pay as well so it's just going to be the same thing it's going to be that same total times the OASD or rate 0.062 and then we'll multiply it out this equals this number times the rate so note we just have an employer and employee portion that'll give us a total of these two so if we say equals this number plus this number that gives us our total I'm going to go ahead and double underline the form I'm going to format paint this home tab format paint put the double underline here as well so there is going to be our totals now we're going to get to that same total here for the employee portion in our register we're not going to put the employer portion in this portion of the register we're going to have to calculate that when we do the journal entry however so we'll do the same thing here but this time we'll do it employee by employee or equals the 50650 times 0.062 that's 31 for the second employee equals this number times 0.062 that's the 177.63 and if we add those together with the sum function equals the sum of these two that'll give us our 20903 and that of course matches the employee portion that we calculated here as a total from the total and the employer portion we'll have to add to that when we do the journal entry