Question

Suppose a college football coach makes a base salary of $2,400,000 a year ($200,000 per month). Employers are required to withhold a 6.2% Social Security tax up to a maximum base amount and a 1.45% Medicare tax with no maximum. Assuming the Social Security maximum base amount is $128,400, how much will be withheld during the year for the coach's Social Security and Medicare taxes? (Round your answers to the nearest dollar amount.)

Answer 1

The coach will have $42,764.80 withheld during the year for Social Security and Medicare taxes.

Step-by-step explanation:

The Social Security tax rate is 6.2% and the Medicare tax rate is 1.45%. However, the Social Security tax is only applicable up to a maximum base amount which is $128,400. In this case, the coach's salary is $2,400,000 per year, so the Social Security tax will only be calculated on $128,400.

To calculate the amount withheld for Social Security tax: $128,400 x 6.2% = $7,964.80.

To calculate the amount withheld for Medicare tax: $2,400,000 x 1.45% = $34,800.

Therefore, the total amount withheld during the year for the coach's Social Security and Medicare taxes will be $7,964.80 + $34,800 = $42,764.80.

Answer 2

The Social Security will be withheld only in January.

Please find the detailed answer as follows:

Step-by-step explanation:

According to the actual regulation, as the coach monthly salary is $200000 exceeds the social security amount of $128400 the Social security can be withheld only till January.