Question

find the social security tax (6.2%), medicare tax (1.45%), and state disability insurance deduction (1%) for the employee. assume the employee is under the fica and sdi maximums at the end of the current pay period and assume that time-and-a-half is paid for any overtime in a 40-hour week. round to the nearest cent if needed.

Answer 1

To calculate the Social Security, Medicare, and state disability insurance deductions from an employee's paycheck, one needs to apply the respective rates of 6.2%, 1.45%, and 1% to the gross income. Employers match the Social Security and Medicare contributions, while independent contractors must pay both portions.

Step-by-step explanation:

The student is asking how to calculate the Social Security tax, Medicare tax, and state disability insurance deduction from an employee's paycheck. To calculate these deductions, one must apply the given percentage rates to the employee's gross income. For Social Security tax, this rate is 6.2%, while Medicare tax is 1.45%, and the state disability insurance (SDI) deduction is 1%.

An important note to add is that while employees see these specific deductions on their paychecks, employers also contribute an equal amount for Social Security and Medicare. This may be indirectly reflected in the employee's wages. Employees classified as independent contractors, such as those in the gig economy, are responsible for paying both the employee and employer portions of these payroll taxes.