Question

an employee earned $45,600 during the year working for an employer when the maximum limit for social security was $132,900. the fica tax rate for social security is 6.2% and the fica tax rate for medicare is 1.45%. the employee's annual fica taxes amount is:

Answer 1

The employee's annual FICA taxes, calculated at 6.2% for Social Security and 1.45% for Medicare on an income of $45,600, amount to a total of $3,488.40.

Step-by-step explanation:

If an employee earned a salary of $45,600 during the year while the maximum limit for Social Security tax was $132,900, the entire salary is subject to Social Security taxes as it is below the maximum limit. To calculate the FICA taxes, you need to apply the respective tax rates: 6.2% for Social Security and 1.45% for Medicare. Since the employer and the employee split the payroll taxes, we'll calculate the employee's portion.

The Social Security tax would be 6.2% of $45,600, which is:

0.062 * $45,600 = $2,827.20

Similarly, the Medicare tax would be 1.45% of $45,600, which is:

0.0145 * $45,600 = $661.20

The total annual FICA tax amount the employee owes is the sum of the Social Security tax and the Medicare tax:

$2,827.20 (Social Security tax) + $661.20 (Medicare tax) = $3,488.40