Question

solve the problem. use a fica rate of 6.2%, a medicare rate of 1.45%, and an sdi rate of 1%. assume the person's earnings will not exceed $31,800 for the year. round to the nearest cent if needed.

Answer 1

To calculate the tax deductions on a $31,800 annual income, apply the rates to find that Social Security is $1,971.60, Medicare is $461.10, SDI is $318.00, and federal and state taxes are $4,770.00.

Step-by-step explanation:

To solve the problem involving payroll taxes on a person's earnings, we must calculate the deductions for Social Security, Medicare, and federal and state taxes based on the given rates. With the annual earnings not expected to exceed $31,800, the deductions will be as follows:

• Social Security (FICA): 6.2% of $31,800 = $1,971.60
• Medicare: 1.45% of $31,800 = $461.10
• State Disability Insurance (SDI): 1% of $31,800 = $318.00
• Federal and State Taxes: 15% of $31,800 = $4,770.00

All figures should be rounded to the nearest cent as required. It is important to note that these rates may change yearly, and the wage limits for Social Security tax may also be updated annually.