 In this presentation we will take a look at the social security tax calculation. We have here the payroll register which we will use to calculate the social security taxes. We have our two employees and the marital status, the number of allowances, the hourly rate and salary, and then we have the regular pay and the overtime pay, and then the total earnings. So here's the main component we want to focus in on here. We have the total earnings. We're going to calculate the OASDI based on earnings. However, the total earnings which is just going to be the regular pay plus the OT pay may differ from the OASDI or Social Security wages. Remember to the different names that we can call the OASDI or Social Security. It's a FICA tax, but the two FICA tax are Social Security and Medicare. We're focusing in on Social Security, which can also be called the old age survivors and disability insurance or OASDI. So when speaking of it, we're probably going to end up calling it Social Security. Easiest thing to say. When abbreviating it, we may use the OASDI for tables as we're doing here. So the point is that we could have a different OASDI wage based on a couple factors. One, if someone hit the cap. So if we had someone that hit the cap, then their OASDI wages will differ. And if there's something that's going to be deductible for OASDI calculations, such as a cafeteria plan, then too it could differ. So if we look at the payroll register, we can't really tell if someone hit the cap. Clearly these are nowhere near the cap here of 128, 400. In this example, this will go up from year to year. But this doesn't give us total earnings. This only gives us the earnings for this pay period. So it doesn't really tell us much about whether or not someone has gone over the cap. What we got to do then is go to the earnings records. So the earnings records for our two employees. And this gives us the year to date earnings for the total earnings and the OASDI. So they could again differ. The total earnings could differ from the OASDI. We can see here that the OASDI is close to the cap for the second employee, nowhere near the cap for the first employee. So if we do the subtraction problem, if we take the cap of 128, 400 minus 125, 535, we get 2,865 that we need in order to get up to this cap. So if this 2,865 then is lower than the actual wages, we're going to use this number so that we don't go over the cap for OASDI. So that means for OASDI wages, we're going to have the 506.50, which is going to be the total wages here, less the cafeteria plan. So this one, there's a cafeteria plan that is bringing this down, which is a health insurance plan of 756.5 minus 506.5 or $250. So this difference is just due to that. The second difference, however, is due to the fact that this person hit the cap. So we can't go over the 128, 400 and this person hit the cap at that point in time. And therefore, we're going to have a lesser of social security wages than total wages. And going forward, we're going to have zero social security wages and therefore zero social security for this particular employee. Then if we do the calculation for social security, it looks something like this, we're going to start off with total here just so we can see the fact that we could use the total and calculate based on this. And then we'll go back and calculate for each individual. And that'll give us an idea that this flat tax and how this flat tax works as being opposed to a progressive tax for the federal income tax or FIT tax. So we're first going to calculate social security based on this number here. So we're going to have the $3,371.50 total wages for all of our employees, all two of them. We're going to multiply that time 6.2 percent or 0.062 in the decimal format to give us $209.30. If we do that again for the employer portion, same calculation, $3,371.50 times the 6.2 percent gives us the $209.03. So note that we're in essence doing this two times, one for the employee, this coming out of the employee's paycheck, two for the employer, this coming out of the employer's checkbook. And if we add those up, really the total is $4,1807 between the employer and employee who will be paying. When we consider the payroll register, we're going to be concentrating, of course, on the employee tax to get to the net check. So if we calculate this out again, now we're going to take the individual employee's wages and add them up and we'll get to the same totals down here. But we'll do that in a different format by calculating the social security tax for each employee. So $506.50 times 6.2 percent in other words is $3,140. This $2,865 times 6.2 percent gives $177.63 for a total of that $209.03. If we do the same thing for an employer portion, then once again the $506.50 times the 6.2 gives another $3,140. The $2,865 times the 6.2 percent gives the $177.63. And if we add those up, we get that $209.03. Off the payroll? Accounting. I don't know anyone in accounting.