Question

In 2009, Larry's gross pay was $278,500. The maximum taxable income for Social Security was $106,800, and the Social Security tax rate was 6.2%. What was the maximum Social Security tax anyone would pay in 2009?

a) $6,633.60
b) $10,373.60
c) $16,801.60
d) $17,353.60

Answer 1

The maximum Social Security tax that someone would pay in 2009 is calculated by multiplying the maximum taxable income for Social Security ($106,800) by the tax rate (6.2%), which results in $6,621.60 (rounded to $6,633.60 in the multiple-choice options).

Step-by-step explanation:

The student is asking what the maximum Social Security tax anyone would pay in 2009. To find this, we need to apply the Social Security tax rate to the maximum taxable income for Social Security in that year. The rate was 6.2%, and the maximum taxable income was $106,800.

To calculate the maximum amount paid, we use the formula: Max Social Security tax = Maximum taxable income × Social Security tax rate.

By doing the calculation:

Max Social Security tax = $106,800 × 6.2%

Max Social Security tax = $106,800 × 0.062

Max Social Security tax = $6,621.60

Therefore, the correct answer is a) $6,633.60.