Question

Bill earned a gross pay of $1,425.50 last week. Using the fact that Social Security tax is 6.2% of gross pay, and Medicare is 1.45% of gross pay, determine the amount of Social security tax AND how much in Medicare is deducted from Bill's gross pay.

Answer 1

To calculate the deductions, multiply Bill's gross pay by the respective tax rates. The Social Security tax deduction is $88.41 and the Medicare deduction is $20.66.

Step-by-step explanation:

To determine the amount of Social Security tax deducted from Bill's gross pay, multiply his gross pay by the Social Security tax rate of 6.2%.

To calculate the amount of Medicare deducted, multiply his gross pay by the Medicare tax rate of 1.45%.

Here are the calculations:

1. Social Security tax deduction: $1,425.50 x 6.2% = $88.41
2. Medicare deduction: $1,425.50 x 1.45% = $20.66

Therefore, $88.41 is deducted for Social Security tax and $20.66 is deducted for Medicare from Bill's gross pay.