Question

In addition to income tax, we are required to pay the federal government FICA taxes that are used for Social Security and Medicare benefits. If you are not self-employed and earn $104,000, what are your FICA taxes?

a) $7,956
b) $8,000
c) $7,965
d) $8,010

Answer 1

FICA taxes for an individual earning $104,000, which include Social Security tax at 6.2% and Medicare tax at 1.45%, total $7,956. The calculations for Social Security and Medicare tax are $6,448 and $1,508 respectively, making answer choice a) $7,956 correct.

Step-by-step explanation:

The question asks to calculate the FICA taxes for an individual who earns $104,000 and is not self-employed. The FICA taxes consist of Social Security and Medicare taxes. As of the tax information given, Social Security tax is 6.2% of the first $113,000 of income, and Medicare tax is 1.45% with no income limit.

To calculate the Social Security tax: $104,000 (income) × 6.2% = $6,448
To calculate the Medicare tax: $104,000 (income) × 1.45% = $1,508

To find the total FICA taxes: Social Security tax ($6,448) + Medicare tax ($1,508) = $7,956.

Therefore, the answer to the question is a) $7,956.