Question

Determine the total annual FICA tax for an annual salary of $110,330. Use $106,800 for maximum taxable earnings

Answer 1

D

Explanation:

Option D is the right choice.

Explanation:

The current Social Security tax is 6.2%

Given maximum taxable earnings = $106800. This means the social security tax will be calculated on a maximum amount of $106800.

Social security tax on $23660 =

Social security tax on $89000 =

Social security tax on $106800 (maximum earnings) =

So, these values fall under option D. Hence, option D is the right choice.

Answer 2

Explanation:

The Federal Insurance Contribution Act (FICA) allows companies to pay a certain amount of the employee's wages as insurance.

The types are: 6.2 per cent as a social security tax of 1.45 per cent as a Medicare tax of 0.9 per cent as a Medicare surcharge on employers making greater than $200,000.

In this case, the percentage of tax applied will be 6.2 + 1.45 = 7.65%

The FICA tax will be 110,330 * 0.0765 FICA tax = $8,440.24