Question

The chief executive officer earns $20,100 per month. As of May 31, her gross pay was $100,500. The tax rate for Social Security is 6.2% of the first $118,500 earned each calendar year and the FICA tax rate for Medicare is 1.45% of all earnings. The current FUTA tax rate is 0.6%, and the SUTA tax rate is 5.4%. Both unemployment taxes are applied to the first $7,000 of an employee’s pay. What is the amount of FICA- Social Security withheld from this employee for the month of June?

a. $7,347.00.
b. $1,116.00.
c. $291.45
d. $1,246.20 .
e. $261.00.

Answer 1

option (b) $1,116.00

Step-by-step explanation:

Data provided in the question;

Earning of the chief executive = $20,100 per month

Gross pay = $100,500

Tax rate for Social Security = 6.2%

Tax earned = $118,500

FICA tax rate for Medicare = 1.45% of all earnings

FUTA tax rate = 0.6%

SUTA tax rate = 5.4%

Now,

FICA Social Security withheld = ($118,500 - $100,500) × 6.2%

= 18,000 × 0.062

= $1,116

Hence,

the correct answer is option (b) $1,116.00